| CATEGORY: NEWS AND ANNOUNCEMENTS |
Tue 24 Jul 2012
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LONDON (SHARECAST) - High street banks saw £16.1bn flow into cash ISAs in the first half of 2012 compared with £10.2 bn in the first half of 2011.
In parallel, outstanding unsecured lending contracted by 2.3% over the 12 months to June. That even as personal deposits rose by 5.1% over the 12 months to June, boosted by strong inflows continuing after the start of the ISA tax year, according to data just out from the British Bankers´ Association (BBA).
Gross mortgage lending of £7.2bn in June was below the six month average of £7.7bn and reflected subdued activity in the housing market. The banks’ net mortgage lending grew by 0.9% in the year to June.
Also to be had in account, the BBA points out, historically the difference between gross lending and capital repayment produced significant increases in net lending each month. With declining levels of gross lending and a rising trend in capital repayment, resulting in part from low interest rates, this difference has largely disappeared.
June’s mortgage approval numbers were affected by the Diamond Jubilee celebrations, Euro 2012 and the wet weather. They fell to 51,610 mortgages, from 59,923 in May and versus the 66,653 average for the last six months. House purchase approvals were 20.5% lower than a year ago.
Nevertheless, the average price of a house purchase approval was £166,600, a rise on May´s figure of 162,700.
New spending on credit cards of £7.0bn was below the recent six month average (£7.1bn) and continues to be more than offset by repayments.
Demand from consumers for loans and overdrafts remains very weak and repayment of unsecured borrowing on personal loans continues to outweigh new lending.
Borrowing demand from industry remained subdued in June with many firms reportedly seeking to reduce their debt levels.
Commenting on today´s data analysts at Barclays are of the following opinion:
“In the aftermath of the financial crisis, lending to both individuals and PNFCs has slowed significantly and this slowdown has intensified further in recent months. To mitigate the slowing credit flow in the economy the government has recently announced a number of supply side measures, such as the Funding for Lending Scheme.
"Although today's data reinforce the case for such initiatives, as the mortgage market remains depressed and lending to PNFCs fell, we think this policy is likely to have a limited effect on the macro economy. We do not think that the terms of the scheme will sufficiently change the banks' lending patterns, as they remain under continued pressure to maintain large liquidity buffers and increase their capital ratios. Furthermore, credit is demand as well as supply constraint, in our view, and therefore purely supply side measures are bound to have only a limited effect on credit flows.”
AB
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