December's lending rise reflects loan processing being stepped-up

Council of Mortgage Lenders (CML) and the Building Society Association (BSA) figures showed borrowing slowing.

But the British Bankers' Association (BBA) said underlying mortgage lending stood at �5.2bn in December, up on November's �4bn figure.

The BBA said the rise reflected banks catching up with loan processing after recent mortgage regulation, rather than renewed demand for credit.

Extra strain

The festive period is never a busy one for lending, but even taking this into account the slowdown over the last few months is clear Adrian Coles, BSA

Regulation of UK mortgages, which was introduced at the start of November, put extra strain on loan processing.

At the time, some banks, most notably Abbey, offered fewer mortgages while they ensured that their administration complied with the new regulatory regime.

David Dooks, BBA spokesman, said December's rebound in mortgage lending "partly reflected a processing catch-up following the advent of mortgage regulation".

Mr Dooks added that demand amongst consumers for personal loans in December was "subdued".

Festive slowdown

Figures from the CML showed a continuation of sluggish autumn lending. Gross mortgage lending stood at �21.3bn in December, down from �21.7bn in November.

However, lending for new house purchases increased from �9.1bn in November to �9.8bn in December.

Nevertheless, spending for new purchases in December was 22% lower than for the same month in 2003.

Likewise, the Building Societies Association said mortgage approvals - loans approved but not yet made - were 23% lower in December than for the same month in 2003.