Massive increase in home loans

A total of 60,518 loans for people buying a new home were in the pipeline during November, 2009, which was the highest number since March 2008, and net lending also increased for the third month in a row to stand at £1.46 billion.
The big improvement in mortgage lending has been driven by increased activity in the housing market, and recent price rises attract more sellers and buyers back into the market.  Buyers want to see that their chosen areas to buy are showing signs of improvement, and sellers are now more likely to get closer to the asking price than they were 6 months ago.


Although an increase in mortgage approvals and higher mortgage lending bodes well for housing market prospects, it is unlikely to be enough to sustain the rapid price increases seen over the second half of 2009. Price increases encourage more people to put their properties on the market and with unemployment on the rise, demand could still be slow.

Unsecured lending contracted for the fifth consecutive month as consumers continued to focus on paying off their debts. Consumers repaid £1.46 billion more of unsecured debt than they borrowed during November, which was slightly down on October´s net repayment of £591 million, but almost double the level seen during the past 6 months.

Credit card borrowing increased by £215 million, although this was offset by net repayments of £591 million on personal loans and overdrafts. Collectively, consumers repaid £7.85 billion of loan and overdraft debt during the past 12 months.

The number of people remortgaging remained unchanged during November, although it was still down on the recent six-month average of just over 29,000 as homeowners continued to stick it out. Figures from the Building Societies Association showed mortgage lending had contracted for the 11 month running in November.

Meanwhile, figures from the Building Societies Association showed that mortgage lending by mutuals contracted for the 11th month in a row during November.  Building society mortgage customers repaid £543 million more than they borrowed during the month.

Customers withdrew £775 million more than they deposited, which was the ninth consecutive month this has happened.

Mortgage lending is expected to remain quite low during 2010 until funding conditions for lenders improve further and more homes become available for sale.
The sector also suffered on the savings front, with customers withdrawing £775 million more than they deposited, the ninth consecutive month this has happened.
Building societies and other deposit takers continue to face heightened competition from institutions with a Government guarantee, which was distorting the savings market.