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Loan repayments hit highest level in 6 years
Capital repayments on high street secured lending have reached its highest level in nearly six years, finally exemplifying significant growth in the UK economy.
Lending repayments reached a height of £9.5 billion for May, up over £1.2 billion on the previous month and the highest figure since back in October 2008, according to the BBA’s latest statistics.
May also proved a very strong month within the remortgaging sector, with figures indicating that remortgaging increased by £500 million from April to May.
Despite the progression in the residential sector, there was however problems within the commercial market, with the recent BoE results revealing a slump of £1.3 billion in lending to non-financial businesses, and crucially – a £0.5 billion fall in lending to small and medium-sized enterprises.
Commenting on lending to businesses, a spokesman for the British Banking Association (BBA), said: “In the current economic climate many businesses are building up their cash reserves and using this to fund activity rather than take on additional borrowing. Our own figures for small and medium-sized businesses show some £125.9 billion is currently held in current and deposit accounts.
“Banks are currently offering some of the lowest interest rates in history and there should be no doubt that now is a good time for businesses to go and see their bank if they want to borrow. If you run a business with a good business plan and want funding, our message is apply to your bank.”
Britain’s small businesses are constantly shackled by high street banks still refusing to lend or only willing to do so at unreasonably high rates.
Government ministers have clashed with bank bosses over their treatment of SMEs, which make up more than half the UK economy.
The Bank’s figures highlighted the continuing defects of the Funding for Lending scheme, which is supposed to provide banks with cheap funds to lend to key parts of the economy.
The Bank of England figures did however, reveal that loan approvals for house purchases were 58,242 in May – ahead of a consensus forecast of 54,800.
By Ian Walker
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