New Loan Growth Rates Slowest Ever
There was a set back for the optimistic outlook with regards to the full and speedy recovery of the UK economy during the month of May, as the Bank of England announced that the figures for growth in new loan completions on both business loans and personal loans to individuals, as well as homeowner loans and mortgages, was at the lowest level it has ever been since records were first kept back in 1993.
Although there has been a continuous and steady improvement in the number of loan approvals over the past few months, since the beginning of the year, this has been from an all time low level of activity and the figures just released for May will have undoubtedly had an adverse effect on confidence levels in the prospect of an early economic recovery.
The Bank of England said that the annual rate of growth for new loans stood at 1.3 per cent in May, compared with a figure of around 11 per cent at the back end of 2007 and the main reason given for the poor growth figures currently was due to lower than expected new acceptances on homeowner loans and mortgages for new house purchase, along with a continued decline in the number of loans for remortgage purposes, which have suffered greatly due to particularly low standard variable rates on borrowers existing loans making a remortgage an unattractive option.
Although the actual number of new homeowner loan cases is increasing steadily, the rate at which these are growing is the cause for concern. There were a total of 43,414 new homeowner loans which completed throughout the month of May, only 223 more than the figure for April, which is the smallest amount of monthly increase since January this year.
