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Mortgage lending drops £600m in October, says BBA

Mortgage lending slumped by £600m in October, according to figures released by the British Bankers Association today.

In its monthly statistical release the BBA says mortgage lending hit £2.9bn in October, down from September’s £3.5bn.

Total mortgage loans approved stayed at £11.2bn, while the number of approvals for house purchase dropped from £3.1bn in September to £2.8bn this month.

Remortgaging figures increased from 51,707 in September to 52,425 in October, while house purchase dropped 1,799 from 23,383 last month to 21,584 in October.

BBA statistics director David Dooks says: “Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now, reflecting a much reduced appetite for borrowing. Mortgage approvals remained low, consumer credit was subdued and people used their deposits to fund spending in October.”

According to Dooks high street banks provided almost £12bn, or two-thirds of all new mortgages, in October. They also increased lending to non-financial companies by £1.4bn.

Dooks now hopes yesterday’s pre-Budget report, combined with the support from high street banks, will stimulate “consumer demand”.

Royal Institution of Chartered Surveyors senior economist Oliver Gilmartin says the news comes as “little surprise”.

He says: “These conditions highlight the difficulties facing first time buyers, particularly where stringent deposit requirements continue to be a major barrier to those wishing to enter the market. Aggressive interest rate cuts by the Bank of England in recent months and the prospect of more to come before Christmas will take time to filter through into increased house sales.”


Rock steady

For an ex-Chancellor who claims to have solved the global banking crises “that started in America”, Gordon Brown appears rather naive about the balance sheet of Mr & Mrs Average Britain.

Freeze puts squeeze on pension limits

This pre-Budget report was all about temporary tax giveaways to entice people to spend our way out of recession. But there is no such thing as a free lunch, so it was always going to be the case that the Government would raise taxes for some.

Predictions for the pre-Budget report

Chancellor Alistair Darling is being urged to cut taxes, increase stamp duty
thresholds and reduce corporation tax in order to stimulate the UK economy in next Monday’s pre-Budget report.


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