Official data for June showed that the flow of total net mortgage lending remained close to its lowest level since the monthly series began in April 1993. And the major UK lenders reported that weak net lending continued into July. In line with rising mortgage approvals, gross lending for house purchase has continued its recovery since the beginning of the year, but remortgaging activity remains very subdued. The major UK lenders reported that over the past month there had been no further increase in their appetite to lend at high LTVs. Several lenders thought that increased competition to lend might lead to some compression of spreads in the second half of the year.

 

Total net consumer credit flows appear to have stabilised at very low levels. The major UK lenders had yet to detect any significant signs of an increase in demand for consumer credit. And the proportion of applications accepted by the major UK lenders fell further in July. There was a further widening in the spread over Libor on credit card lending in July, partly reflecting increases in actual and expected default rates, as reported by lenders in the Q2 Credit Conditions Survey.