Lending to individuals
Latest figures from the Major British Banking Groups for June indicated that total sterling lending to the UK private sector showed a net underlying increase of 13.8 bn (+1.1%) to 1,228 bn. This was higher than last month’s underlying rise of 12.6 bn but lower than the average of 15.2 bn over the previous six months.
Net mortgage lending rose by an underlying 5.6 bn. This was slightly lower than the 5.8 bn rise in May but higher than the average of 5.3 bn over the previous six months. In the first half of 2010 mortgage lending was some 18% stronger than in the equivalent period of 2009. Unsecured personal lending fell by 0.1 bn in June, compared with an average rise of 0.3 bn in the previous six months. Loads and overdrafts rose by 0.2 bn, whilst underlying credit card borrowing fell by 0.2 bn and has now declined in four of the last six months.
Lending to real estate companies rose by 1.1 bn and to hotels and restaurants by 0.3bn, whilst lending to wholesale and retail trade fell by 0.6 bn, reversing the 0.7 bn rise in May.
House Prices. According to the latest Halifax House Prices Index, house prices fell by 1.2% in June. House prices increased by 4.5% in the first half of 2010 with a 2.6% rise during 2010 Q2.
House prices increased in all regions during the second quarter with the exception of Wales. The biggest rises were in Scotland (5.7%), South West (3.8%) and East Anglia (3.5%) . The smallest increases were in North West (0.2%) and North (0.9%) . Wales showed a slight fall (-0.8%) , reflecting the increasing affordability difficulties for buyers in the Principality.
The pick up in house price inflation in London and the South East over the past year contributed to a slight increase in the ratio between prices in the south and north in 2010 Q2. This follows four years of almost continuous decline in the ratio, tentatively suggesting that the north/south divide is at, or slightly passed, its low point in the current cycle. The average property price in the south stood at 1.58 times the average in the north in 2010 Q2 compared with a peak of 2.19 times in 2007 Q2.