Mortgage lending increases by 46%

August mortgage lending by major banks increased by 46% after a decline during the previous month, figures have revealed.

According to the British Bankers' Association net lending, which excludes redemptions and repayments, fought back from just £1.9 billion in July to hit £2.8 billion last month.

A recovery in the property market boosted demand, pushing the figure to a little more than the recent six-month average of £2.7 billion and 17% higher than in August last year.

Showing the seasonal slowdown in the housing market activity during August, the number of mortgages given the go-ahead for people purchasing a house declined slightly on the previous month at 38,095.

Demand for mortgages for house purchase has recovered steadily during the past year, with the number of mortgages approved for house purchase last month 81% higher than in August last year, and more than double the low of 18,330 reached in November 2008.

But the number of people remortgaging remained subdued at just 26,124, while those releasing equity from their property or taking out a buy-to-let loan hit a new record low of 17,918.

David Dooks, BBA statistics director, said: "The main high street banks' mortgage lending has stabilised in a market where other lenders are largely inactive.

"Loans approved for house purchase have recovered to early-2008 levels, but low levels of customer demand and a limited number of properties coming on to the market will continue to moderate lending."

Consumers continued to respond to the recession by reducing their levels of unsecured debt and increasing their savings.

Credit card spending was slightly down on the previous month at £5.6 billion, with repayments continuing to outstrip new usage at £5.8 billion.

Once interest and charges were factored in, outstanding plastic debt rose by £203 million, but people repaid £183 million more on loans and overdrafts than they borrowed during the month.

Consumers have now reduced outstanding personal loan debt by £1.9 billion since the beginning of the year.

Savings levels also jumped by £3.3 billion during August, more than double the recent six-month average, as people focused on bolstering their financial position.

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