Lending to individuals increased by Â£1.5 billion in June says the Bank of England, which is above the average of Â£1.3 billion a month over the previous six months.
Secured borrowing at Â£1 billion also increased above the monthly average of the last six months of Â£0.6 billion. Mortgage applications were also up with 57,667 in June compared to the monthly average over the previous six months of 54,798. Remortgages were also up at 31,486 compared to the six month monthly average of 29,216.
Although consumer credit increased by only Â£0.5 billion compared to the six month monthly average of Â£0.7 billion, the credit card component within it increased by Â£0.3 billion compared to the six month average of Â£0.2 billion.
But lending to business was still down showing an annual growth rate of -3.7% and within this lending to small business, although positive at an increase of Â£0.2 billion compared to an average monthly decrease of Â£0.5 billion over the previous six months, showed an annual growth rate of -3.3%.
Commenting on these figures Kerry Agiasotis, Chief Commercial Officer for Western Union Business Solutions, said:
"Growing consumer confidence is again apparent in today’s figures and will certainly support small business confidence.
“Having said that, the lack of lending to SMEs is a big concern, with numbers again failing to match the Government’s expectations. Only three per cent of SMEs believe that the cost of securing bank finance has improved over the last year, which is one reason we have seen increased demand from our SME clients for alternative credit facilities.Â
“There is a clear, on-going need for SME financing but many of our customers find the process of applying for traditional loans increasingly challenging, which is in turn affecting demand and forcing them to look to alternative avenues.
“The Funding for Lending Scheme is up and running and essentially provides SMEs with a refreshing cash pool to help spur growth.Â More focus should now be placed on different ways to channel these funds through reliable alternative finance channels to ensure the money gets to the small businesses that need it most."
Nida Ali, economic advisor to the Ernst & Young ITEM Club, commented:
“Although mortgage approvals and net lending broadly flat-lined in June, it is encouraging that May’s levels for both the housing market indicators were sustained. The Funding for Lending (FLS) and Help to Buy schemes have helped prop up a weak housing market, with mortgage approvals now well above the previous 6-month average. We expect these measures to continue to have a positive impact, with approvals on course to increase by about 12% this year.
“The FLS seems to be feeding through to lending to businesses as well. After falling consistently over the past few months, the increase in lending to SMEs in June was very welcome. Having said that, based on just one month of data, it’s still too early to draw any firm conclusions about the outlook.”