Repayments outstrip loans to building firms, say bankers

Lending to construction and development firms fell by £614m between May and June 2011, figures from high street banks have shown.

Funding for housebuilding saw the largest fall of £394m in the British Bankers Association’s statistics.

The fall came as a result of repayments outstripped borrowing in June.

The number of mortgages lent for purchase rather than remortgaging rose slightly from 30,803 to 31,747 when seasonally adjusted between May and June.

BBA statistics director, David Dooks said: “Banks continue to lend for house purchase but the weak mortgage market is self-evident, although some growth is coming from the buy-to-let sector to meet demand for rental properties. Personal deposits are growing only slowly as some people may be using savings to pay higher household bills. Businesses, as has been seen elsewhere, are concerned about the economic outlook and, in weathering difficult trading conditions, they are putting off expansion or investment plans and limiting borrowing.”