Bank of England Reveals £314m Loan

LONDON (Thomson Financial) - Lending to UK home-buyers and the wider private sector rebounded in July, brushing off the Bank of England's series of interest rate rises, according to figures from a leading group of banks.

In its monthly analysis of mortgage and consumer borrowing, the British Bankers Association said net mortgage lending rose by 5.7 bln stg in July, above the recent six monthly average of 5.4 bln stg -- which was also the figure recorded for June, revised upwards from the earlier estimate of 5.1 bln stg.

Total sterling lending to the UK private sector also picked up in July, up 13.6 bln stg compared with a 13.1 bln rise in June, although just below the six-monthly average of 13.7 bln.

'Longer-term trends in mortgage lending are little changed but July's strong rise was surprising, given the expected cumulative impact of higher interest rates,' said David Dooks, director of BBA statistics.

The BoE has raised interest rates five times in the past year to 5.75 pct, with the latest rise coming in July, but their impact so far on mortgage lending has been relatively benign.

'This resilience shows the popularity of home ownership and also reflects more re-mortgaging activity,' said Dooks.

However the BBA also released figures showing this round of monetary tightening is starting to hit consumer lending, with credit card borrowing down 0.1 bln stg in July, while loans and overdrafts were up 0.2 bln stg.

'Consumers' borrowing on cards again fell and personal loan and overdraft demand remained subdued because household finances have tightened,' said Dooks.

Elsewhere there was a 1.6 bln stg rise in lending to real estate companies, while lending to retailers increased by 0.8 bln. Lending to construction fell 0.6 bln stg and credit to hotel and restaurants was also down by 0.5 bln stg.