The BBA lending data showed mortgage activity remained at subdued levels. Net mortgage lending was £0.3bn in November from £0.8bn the previous month. The number of mortgage approvals for house purchases fell to 34.7k from 35.2k previously.

The BBA noted that the modest pick-up in house purchases and remortgaging activity had led to stronger gross mortgage lending in recent months, however capital repayment has continued to be strong so the overall effect on net mortgage lending has been modest.
 
Demand for unsecured lending remained weak with net consumer credit at -£0.2bn from £0.1bn previously. Net lending to non-financial services companies came in at -£0.7bn in November (£1.0bn previously) and net lending to financial companies was -£20.2bn (-£11.3bn previously). Business lending was weaker in the first 11 months of 2011 compared with the same period last year as companies appear to have reduced bank borrowing and used cash flows to fund their operations.
 
We expect both credit demand and supply to stay at the current weak levels. Throughout this year, housing market activity has not registered a significant improvement and we expect this to continue next year. This, together with the subdued consumer confidence and weak labour market, is likely to bear down on both secured and unsecured credit demand. Furthermore, there are risks to credit supply in the coming year from the rise in bank funding costs, especially if the pressure from the euro area crisis intensifies.


source: BarCap