UK Finance has issued its lending update for January 2018, covering card spending, gross mortgage lending and business deposits.
The organisation found that card spending was 5.8% higher in January than in the same month of last year, although higher repayment levels meant that the pace of borrowing experienced little change, rising by 4.8% on an annual basis.
Gross mortgage lending in January is estimated to have been £13.8 billion – 7.7% more than January 2017 and slightly higher than the monthly average of £21.4 billion for 2017.
UK businesses’ deposits rose by 7% in the 12 months to January, while borrowing over the same period contracted slightly, by 1.4%. Within business sectors, manufacturers’ borrowing expanded modestly, while construction and property related sectors constricted.
Eric Leenders, the Managing Director of Personal Finance at UK Finance, comments: “January saw higher levels of repayments on credit cards, which is expected at this time of year, as customers pay off their festive spending. Meanwhile, households were careful with their outgoings, as wage growth remains below the inflation rate.
“Gross mortgage lending in January increased by almost 10% compared to the same period last year, and was higher than the monthly average, as customers took advantage of mortgage deals on offer at the end of 2017.”
The Managing Director of Commercial Finance at UK Finance, Stephen Pegge, also reacts to the data: “Business sentiment remains positive, with confidence in short-term trading conditions buoyed by the recovery in international markets. Investment levels remain broadly unchanged and borrowing continues to err on the side of caution, as companies adopt a wait-and-see attitude to trading uncertainties, opting to use their deposits as buffers for spending decisions.”
The Director at mortgage broker Private Finance, Shaun Church, gives his thoughts on the figures: “The mortgage market started 2018 with a bang, as gross mortgage lending soared by 10% year-on-year. While there may be whispers of a housing slowdown, these figures demonstrate that buyers are eager to get on the ladder and banks are looking to lend.
“With speculation of further interest rate rises to come in 2018, borrowers should act soon to lock in competitive rates. With a flurry of remortgage activity in January, existing homeowners are already shopping around to capitalise on the favourable rates on offer. Those with remortgaging still on their to-do list should act soon to ensure they secure the best possible rate. With inflation rising, savings stagnating and wage growth slowing, mortgage rates are one of the few market conditions currently working in the consumers favour.”