Slow economic growth keeps lending in check
Published: 27 July 2011 | Author: Bernard Clarke
Slow economic growth, confirmed by yesterday's announcement that UK gross domestic product grew by only 0.2% in the second quarter of 2011, is continuing to bear down on mortgage borrowing.
Although gross mortgage lending, at an estimated £12.6 billion in June, was 16% higher than in May, it was 3% lower than in June 2010, according to our data. Gross lending in the second quarter of 2011 totalled an estimated £33.5 billion, 11% more than in the first three months of the year but 3% lower than in the second quarter of 2010.
Lending in the first half of this year totalled £63.7 billion, slightly lower than the £64.1 billion lent in the first six months of 2010.
The market commentary we published earlier this month highlighted how a combination of disappointing economic growth, consumer price pressures, falling disposable income and an uncertain jobs market was weighing down on house purchase decisions. But higher demand for rental property in recent months has contributed to an increase in landlord activity.
Households have reduced debt levels over the last year, but largely as a result of restricted levels of new mortgage lending, unsecured write-offs and nominal income growth. Households in aggregate have not been repaying mortgage debt more quickly.