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Economy in Brief

As British Mortgages Approvals Decline Outstanding Mortgage Debt Declines but Credit Card Debt Keeps Rising
by Louise Curley September 23, 2008

August data on bank lending to individuals for mortgages and consumer credit were released today by the British Banking Association (BBA), a trade association which comprises Britain's biggest banks.

According to the BBA report, mortgage lending by banks declined by 8.6 billion pounds in August and was 12.7 billion below the level of August 2007. Bank lending on credit cards, however, rose 1.1 billion pounds in August and was 4.2 billion pounds higher than August 2007. Outstanding loans on mortgage and credit cards are shown in the first chart. Other consumer credit loans -- overdrafts and structured loans to individuals -- were both off slightly in August and from a year ago, as noted in the table below.

The decline in outstanding mortgage debt has been due to the decline in the number and value of mortgage approvals. Both have declined sharply since the end of 2006. The number of approvals fell another 5.2% in August and was 64.0% below August 2007. The value of mortgages approved fell 8.8% in August and was 69.1% below August, 2007. Both the number and the value of approvals are currently at the lowest points ever recorded since the series were first begun in September 1997.

UK  BANK LENDING BRITISH BANKING ASSOCIATION Aug 08 Jun  08  Jul   07  M/M  chg  Y/Y  chg  2007 2006 2005
Amount Outstanding (Bil. Pounds)
  Mortgages  537.4 546.1 550.1 -8658 -12663 549.3 542.6 521.1
  Credit Cards 33.6 32.5 29.4 1075 4160 31.7 31.2 33.4
  Overdrafts 9.6 9.7 10.1 -0.1 -0.4 9.7 9.8 9.9
  Structured Personal Loans 66.0 66.3 66.2 -0.3 -0.2 67.0 66.3 64.0
 Mortgage Approvals
  Number (Thousands) 21.1 22.2 58.6 -5.2 -64.0 686.6 827.1 753.7
  Value (Bil. Pounds) 2.8 3.1 0.9 -8.8 -69.1 105.7 115.7 97.3
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