UK net mortgage lending rises by record 6.2 bln stg, approvals up - BBA

UK net mortgage lending rose by a record 6.2 bln stg in August, while mortgage approvals -- a gauge of demand -- also increased during the month, a leading industry body found today. The British Bankers' Association said mortgage approvals for house purchase totalled 71,278 in August, up from 68,612 in July, while the value of approvals rose to 10.09 bln stg from 9.55 bln in July. Net mortgage lending in August meanwhile rose by a record 6.2 bln stg, 0.4 bln stg higher than the 5.8 bln stg rise in July and well above the monthly average of 5.4 bln stg over the past six months. The numbers add to the weight of evidence recently suggesting that the UK housing market is strengthening, despite the Bank of England's surprise quarter-point rate hike during the month. Gross mortgage lending meanwhile also reached a record of 20.9 bln stg, up 9 pct on July and 24 pct higher than the 16.9 bln stg recorded in August last year. BBA director David Dooks noted, however, that the record gross and net mortgage lending is "a reflection of house prices and mix of loans", rather than increased volumes. "Compared to the numbers of secured loans approved at the same time in previous years, August shows robust and stable demand orientated towards house purchase rather than for other purposes, though below the volumes seen in 2003," he said. By contrast, meanwhile, unsecured lending remained very subdued. Unsecured personal lending fell by 0.2 bln stg in August, reducing the average rise over the past six months to 0.1 bln stg. Within that, loans and overdrafts rose by 0.2 bln stg, but credit card lending declined by 0.4 bln stg. "The on-going weak appetite for consumer credit, driven by a further reduction in credit card lending, continued in August," Dooks said.