Slowdown in home loans pace

MORTGAGE lending experienced the usual end-of-year downturn in December, latest industry figures show. But consumers' appetite for debt showed no sign of letting up.

Net lending grew by £3.6bn, down 7% on November's figure, according to the British Bankers' Association. Home loan approvals - loans agreed but not yet advanced - were 21% lower by number and 18% lower by value than in the previous month.

But BBA chief executive Ian Mullen said there was no sign of the market weakening. 'The full year 2001 saw gross lending 48% higher than in 2000, as the fundamental strength of the market was underpinned by rising property prices, equity withdrawal and lower interest rates.'

Debt on credit cards, store cards and loans rose by £1.31bn. The BBA said that even once seasonal factors were taken into account there was still an increase of £1.09bn - the highest monthly rise yet.

The increase was fuelled by strong credit card spending as people put just under £6.4bn of debt on to their plastic. The overall rise was partially offset by repayments, and once these had been taken into account credit card debt rose by £876m - the biggest jump since the previous December.

Overdraft borrowing rose by more than had been expected, increasing by £409m. The BBA said this could be the temporary effect of high Christmas spending and may fall in January.

But the number of loans taken out during December fell to £2.83bn, compared with November's figure of £3.63bn. Once repayments had been taken into account net lending crept up just £29m for the month.