Mortgage demand stays sluggish

Mortgage lending by Britain’s biggest banks was flat last month, as demand for borrowing remained subdued amid a sluggish economy.

Gross mortgage lending remained at £7.6bn last month, equal to the previous month’s lending, according to the British Bankers’ Association (BBA), after an 11 per cent plunge between May and June.

Elsewhere, the number of mortgage approvals was up 4 per cent month on month at 74,950, while remortgages increased 7 per cent to 26,043.

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David Dooks, BBA statistics director, said: “Demand for borrowing from both households and companies continues to be weak, reflecting slow growth in the economy.”

Net mortgage lending – gross lending minus repayments – was up in the period by 1.7 per cent at £900m, while unsecured credit, such as loans and credit cards, contracted by 1.1 per cent to £100m. Retail sales continue to grow slowly – edging ahead 0.2 per cent in July – so consequent demand from consumers for unsecured borrowing remains weak, the BBA said.

Companies repaid loans more than they borrowed in July, leaving net lending of minus £8.6bn. This compares to a surplus of £6.8bn in June.