Approvals for secured loans increased over the course of May.
According to new figures by the Bank of England, some 114,000 mortgage approvals for house purchase were granted last month - a rise from the 109,000 recorded during April. Overall, 17 billion pounds in home loans was approved in May, in comparison to 16.3 billion pounds lent out from the previous month. Meanwhile, the value of secured loans taken out against all property was reported to have risen to 32.9 billion pounds.
The study also indicated that total lending growth to individuals picked up last month as an extra 9.5 billion pounds was issued compared to an increase of 9.2 billion pounds in April. However, in spite of the resurgence, the Bank's May figure was reported to be below the previous six-month average. Consequently, the 12-month growth rate fell to 10.2 per cent - a decrease of 0.2 percentage points.
Meanwhile, a fall in net credit card lending was found to have taken place. May lending said to be down by 0.2 billion pounds, in comparison to a 0.1 billion pounds increase in April. The study also indicated a rising take-up of other loans and advances as growth in this area was reported to be 1.1 billion pounds - a rise from the 0.4 billion pounds previously recorded. Despite this, year-on-year consumer credit uptake decreased to 5.2 per cent.
Commenting on the figures, Howard Archer, chief UK and European analyst for Global Insight, said: "Despite the pick up in mortgage activity in May, the overall trend still appears to be weaker in recent months as higher interest rates, elevated house prices and modest real disposable income growth increasingly squeeze new buyers out of the market and make it more difficult for existing house owners to trade up."
Mr Archer claimed that the property market could be set for a further "slowdown in activity" as consumers struggle further to make repayments on secured loans. The economist also suggested that there is a chance that the Bank of England's monetary policy committee (MPC) will increase interest rates by 0.25 per cent to 5.75 when it meets next week. He added that there was a "very real possibility" that the MPC is set push up the base rate to the six per cent barrier before the end of the year.
Meanwhile, a "substantial number" of consumers were claimed to be set to see their Secured loan costs increase "markedly" over the remainder of 2007 as they come to the end of their fixed-rate mortgage deals. Despite this predicted increase in mortgage costs, prices are still expected to continue to rise, with borrowers set to take out higher loans in a bid to get on the property ladder.
Mr Archer also pointed out that consumers are still increasingly stretching themselves to buy a home despite the effects of recent base rate rises on their finances. "Clearly, the higher interest rates go, the greater the danger that at a growing number of people will be pushed over the edge in their personal finances," he added.
Author Resource:-
Abbi Rouse writes for Essentially Home Loans. Our visitors can apply for secured home loans online, for whatever reason with whatever credit history. Visit us today for the best rate loans available.
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