UK mortgage lending up again
UK mortgage companies concluded just over £10 billion worth of business in the month of May which is the fifth consecutive monthly increase. This is an increase from the £9.7 billion in April and we are back to levels from November last year. When you bear in mind the general reluctance to acquire property ahead of the UK general election this fifth consecutive monthly increase is certainly an interesting development.
Why has interest in UK property risen yet again?
Despite the fact experts and the general media have attempted to talk down the UK property market there does seem to be a spine of support. Net UK mortgage debt, after taking into account repayments during the month of May, has increased by £1.1 billion to £793.6 billion. The figure is £7.2 billion higher compared to the same period last year and with mortgage bad debts reducing this would seem to indicate more investment demand.
While experts have very different opinions about the UK property market IHS Global Insight expects UK property prices to increase by 6% in 2015 although growth will fall to around 5% in 2016. On the surface this may seem disappointing but when compared against the European and general worldwide economic background, these figures are very impressive.
Are consumers now positive on the UK economy?
The figures from the mortgage arena seem to indicate a renewed demand for UK property and with overall consumer debt increasing by £4.5 billion year-on-year, this further underlines the situation at the moment. We did see a period over the last few years when consumers were repaying as much debt as possible but this has now turned full circle.
It is a relief to see the UK banking community doing what it does best, lending money to the UK public and in particular the property market. This is an industry which has been under significant pressure and attracted more than its fair share of criticism over the last few years. We have seen an increase in regulations, banking bonuses mentioned time and time again for political purposes but hopefully this ongoing growth trend will refocus attention back to basic banking requirements.
Concern in the business arena
One surprising fact from the information released this week is that business lending fell by £700 million in May compared to April. There had been an upward trend in place for the previous four months although overall business lending, to non-financial companies, is actually 3% lower than the same period last year. This is perhaps the only concern surrounding the UK economy at the moment, the fact that many businesses are struggling to secure additional capital which they require to support and grow their businesses.
Conclusion
On the whole these lending figures seem to suggest further confidence in the UK economy and property. The only concern is a reduction in non-financial business lending although hopefully this figure, after a four-month period of consecutive growth, will turn out to be a blip. Either way, it will be interesting to see how the UK economy performs compared to its peers in Europe and across the world, many of whom are still struggling.