The latest High Street Banking Statistics report, for August 2016, from the British Banking Association (BBA) suggests that the housing market is beginning to soften.
On an annual basis, gross mortgage lending rose by just 1% in August, to £12.4 billion.
The organisation also found that consumer credit continues to show annual growth, of over 6%, reflecting fairly strong retail sales and favourable interest rates for personal loans and overdrafts.
In addition, non-financial company deposits rose by an average of around £2-3 billion per month in 2015, but fell back in the first half of this year. They are currently growing at an annual rate of 3.8%, compared to around 9% in 2015.
The Chief Economist at the BBA, Dr. Rebecca Harding, comments on the figures: “The High Street Banking Statistics published today point to a softer housing market, strong consumer credit and slightly weaker business borrowing in August. The data was collected before the Bank of England reduced interest rates to 0.25% and so gives an indication of some of the underlying pressures that the MPC [Monetary Policy Committee] was responding to when it made this decision.
“Mortgage borrowing is growing at a slower pace than it has for the last few months, reflecting both the slowdown in housing market growth after the April spike and broader trends in the sector.”
Ahead of the introduction of a 3% Stamp Duty surcharge for additional homes on 1st April 2016, the housing market experienced a significant surge in property sales.
Dr. Harding continues: “Given the low interest rate environment and high levels of confidence during the summer, the strong credit growth can be interpreted as strong consumer sentiment.
“Company deposits grew at an annual rate of 3.8% in August 2016, compared 9% in August 2015, suggesting that companies may be using their own internal resources to fund working capital and growth requirements.”