Bank lending to households on the rise

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Bank lending to individuals rose by £2.9 billion in the three months to August 2013, according to the Bank of England (BoE).

Lending increased at a faster rate during the quarter than it did in the first six months of the year, largely as a result of higher mortgage lending.

Net mortgage lending also rose during the quarter, with mortgage approvals for home purchases at their highest level since the three months leading up to February 2008.

Meanwhile the Council of Mortgage Lenders (CML) said gross mortgage lending in September was an estimated £16.2 billion, 41% higher than September last year (£11.5 billion).

It also said mortgage lending for the third quarter of 2013 was an estimated £49.3 billion, the highest amount it's been since the third quarter of 2008.

The first part of the Help to Buy scheme - the equity loan available in England and Scotland – and the Funding for Lending Scheme are believed to be behind the rise. Households also found it easier to get access to unsecured credit during the three months to August 2013; while the effective interest rates on new personal loans fell.

Paul Hunt, managing director of Phoebus Software, said: "There has been a conspicuous leap in mortgage lending over the past nine months. It's great to see so many new signs of life in the housing market which has been static for a while.

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"While the economy continues to grow, the whole market is gaining strength and lending should continue to rise. We've started seeing impressive month-on-month increases in mortgage lending and high loan-to-value lending is 60% higher than this time last year. Mortgage rates are set to remain low for the next three years. It's clear conditions have eased for borrowers."

However, the Bank of England reported a fall in lending to businesses of £2.3 billion in the three months to August.

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