Banks ramp up mortgage lending

 

Banks and building societies ramped up mortgage lending over the summer in a sign that efforts to boost the flow of credit are having an impact.

The Bank of England said overall availability of secured credit to households increased significantly in the quarter to September, in contrast to previous expectations for little change.

However, most of the products were aimed at people with big deposits and the Bank noted that credit-scoring criteria tightened over the quarter.

The overall availability of credit to the corporate sector was reported to have remained unchanged for small, medium and large companies.

The Bank of England and the Treasury's £80 billion Funding for Lending scheme was fired into action at the beginning of last month to unclog the flow of credit to households and businesses.

Yesterday, the Bank said it had seen an "early impact" of its scheme as borrowing rates begin to come down, but warned it might not be able to prevent total lending from falling over the next 18 months as wider global economic troubles continue to weigh on markets.

In its credit conditions survey today, the Bank said mortgage availability is expected to increase further over the next three months, including to borrowers spread across loan-to-value ratios.

Vicky Redwood, chief UK economist for Capital Economics, said: "Overall, the outlook for bank lending is better than it was a few months ago, helped by the latest policy initiatives.

"Nonetheless, we think it will be a long and slow process to get credit flowing freely around the economy again."

She described the outlook for business lending as "less than encouraging" and added: "Even if banks make more credit available, households may not want to borrow more."

The Bank's survey said tough wholesale funding conditions have dragged credit availability down over the past year, but that lenders have recently seen some improvement.

The proportion of mortgages being approved has remained broadly steady and lenders do not expect to have to change their credit scoring criteria further in the coming months.

Demand from people looking for a mortgage for house purchase is expected to show a small uplift in the coming months, especially for buy-to-let mortgages. The rental sector has seen a boom in recent months as people have struggled to get on the property ladder.

The availability of non-mortgage lending to households is also expected to pick up "slightly" towards the end of the year, the report said.

A small increase in the proportion of loan approvals for credit card borrowers is predicted, due to a loosening in credit scoring criteria.

Credit availability to the corporate sector is expected to remain broadly flat for the rest of the year, although the proportion of loans approved for medium-sized firms is thought likely to increase.

Lenders said demand for credit from small and large businesses has recently fallen, while demand from medium-sized firms has held up.

A lack of merger and acquisition activity and capital investment amid the mood of caution stemming from the eurozone crisis were cited as underlying factors for the falls in demand.

The quarterly report asks lenders about trends over the past three months and their expectations for the coming three months.

PA

Start your day with The Independent, sign up for daily news emails
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions