LONDON (Dow Jones)--Net mortgage lending by U.K. banks grew at a slightly faster pace in October than a month earlier, but the outlook continues to deteriorate as mortgage approvals eased yet again and to a 19-month low, data from the British Bankers Association showed Tuesday.
The figures also showed that non-financial firms continued to repay bank debt, with net lending to them staying negative in October.
Seasonally adjusted net mortgage lending grew GBP1.7 billion in October. While that was above a revised GBP1.5 billion rise in September, it was much weaker than the GBP3.0 billion increase of the corresponding month a year earlier.
The BBA originally reported that net mortgage lending grew GBP1.6 billion in September.
Despite October's modest improvement in net lending, the outlook is subdued. Mortgage approvals--a reliable forward looking indicator of housing market activity and prices--eased again, totalling just 30,766 in October. That is the lowest total since March 2009 and compares with 31,058 in September and 42,076 in October 2009.
"Activity in the mortgage and consumer credit markets continued to be subdued in October, reflecting uncertain prospects for households and lower consumer confidence," said David Dooks, statistics director for the BBA.
Non-financial firms again paid down debt in October, but by the smaller amount of a net GBP0.1 billion in October compared with a repayment of GBP3.3 billion in September. The BBA said the continued contraction in lending reflected firms' repayment plans and rebalancing of balance sheets, rather than any continuation of tight credit conditions.
"Credit availability for viable businesses has improved, so a continued contraction in net lending growth reflects repayment behaviour, particularly by larger companies," Dooks said.
-By Ilona Billington, Dow Jones Newswires; +44 20 7842 9452; ilona.billington@dowjones.com
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