Mortgage lending rises as business lending falls
Figures from UK Finance, the industry body for the finance sector, show that mortgage lending grew in January but lending to businesses fell.
Mortgage lending saw a 9.7 per cent year-on-year increase, rising to a total of £21.9 billion. A substantial element of this increase has been widely attributed to the Chancellor’s surprise move to scrap Stamp Duty Land Tax for first-time buyers on the first £300,000 on property purchases worth up to £500,000.
Meanwhile, the total value of personal loans fell by 15 per cent over the same period, with consumers diverting their borrowing to credit cards. There was a two per cent increase in deposits at banks, reaching a total of £835 billion.
The figures for business lending painted a different picture with lending contracting by 1.4 per cent in comparison with the same month last year.
UK Finance said that, taken together, the figures paint a picture of ‘sluggish’ growth in the UK economy as a whole, noting that “real earnings, when adjusted for inflation, are still running well below the inflation rate.”
It noted that inflation is expected to stay at high levels, limiting consumer spending and holding back economic growth.
Stephen Pegge of UK Finance said: “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.”