According to the latest data released by the Bank of England, lending to individuals in September has increased by £1.4billion compared to August.
This is in keeping with the growth rates in this statistic over the last few months, providing encouraging signs of a pick up in the lending market, the Centre for Economics and Business Research reports.
Cebr Economist Stephan Marjanovic said: “Mortgage lending rose in September, with an increase of £1billion over the month.
“With an average monthly increase of £0.8billion over the last six months, September’s growth is another sign of a healthy lending market.
“It is important to note that part of this growth will be caused by increasing prices in the housing market, due to fundamental drivers such as population growth and slow housing supply increases, as well as policy drivers such as the Funding for Lending Scheme. Nonetheless, the data show a market more willing to lend to house buyers.
“The total number of approved mortgages has continued to rise, up by 4.5% over the last three months. This provides an encouraging sign that the housing market may be on its way back up. Hopes are that the second part of the Help to Buy scheme, opened for applicants in early October, should buoy the market further both in terms of value and number of approved mortgages by decreasing average deposit requirements.
“Consumer credit growth is slowing, with an increase of £0.4 billion over the month of September, compared to a average monthly increase of £0.6 billion over the last six months. Despite this slight dip, lending to consumers is still up 3.5% over the year, showing encouraging signs for an economy highly dependent on consumer spending.
“As the housing market continues to recover, there is a hope that the lending market might continue its upward trajectory, though possible increases in interest rates as the economy recovers could put downwards pressure on this growth.
“The growth in lending seen in 2007 is one that is still far out of reach, and mortgage approval rates, too, are a long way from pre-crisis peaks. Overall, lending activity remains relatively subdued, and despite today’s data, monthly increases in lending to individuals is still below £2billion, compared to pre-crisis increases of over £10billion.”
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