Mortgage take-up at 15-month high

Gross mortgage lending by UK banks added up to £17.8bn in September, the highest monthly total since July 2004, according to figures published today by the British Bankers' Association (BBA).

A total of £17.8bn was advanced to mortgage customers by the BBA's members during the month, almost 6% more than in August and 9.3% up on September last year.

The average loan taken out for a house purchase remained unchanged over the month, at £130,500. This compares with an average of £111,300 recorded 12 months earlier.

Net lending - the total advanced minus repayments and redemptions - rose by £4.9bn, compared with £4.4bn in August 2005 and September 2004.

This is the biggest monthly increase so far this year and above the £4.4bn average of the previous six months.

September also saw a rise in the level of mortgage approvals, with 199,031 home loans worth a combined total of £19bn approved during the month.

Compared to the same month last year, the number of loans approved for house purchases was up 17% and the value of those loans up by 37%.

Remortgage approvals were 3% higher by number and 23% higher in value, while the number of borrowers taking loans to withdraw equity from their homes was down 13%.

The number of remortgages approved was higher than the number of loans offered for house purchases, the first time this has been the case since March.

"September's upturn in both gross and net mortgage lending possibly reflects a delay of the demand normally seen in the late summer, but there is also a stimulus from remortgaging," said David Dooks, the BBA's director of statistics.

"Two-year fixed rate loans taken during the buoyant period of 2003 are maturing around now and borrowers are seeking out new options."

While September saw a pick-up in mortgage lending, the amount of new debt taken on through other forms of borrowing fell.

New borrowing on credit cards totalled £7.4bn, some 8% less than in August.

However, repayments were also lower, and when seasonally adjusted the increase in net lending over the month, a figure of £108m, was above the recent average of £75m.

Net lending on personal loans and overdrafts increased by £0.4bn over the month, after rising by £0.7bn in August.

Mr Dooks said: "The outlook for consumer borrowing remains subdued, with card usage modest in comparison with previous years."