Appetite for borrowing stays low as mortgage market remains in slump

 
Julian Harris
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BRITAIN’S slump in mortgage lending continued in January, the British Bankers’ Association (BBA) revealed yesterday.

Mortgage approvals for house purchases stuck at 28,932 for the month – virtually unchanged from December’s figure of 28,907, which was close to a two-year low.

Mortgage approvals tumbled 20.9 per cent year-on-year, to less than half the average monthly level of 58,149 seen since 1997, according to Howard Archer of IHS Global Insight.

“The average value [£135,200] was 2.7 per cent lower than a year earlier,” the BBA said.

“Housing market activity remains stuck in the doldrums, which seems highly likely to maintain downward pressure on prices,” Archer added.

Net mortgage lending rose by £1.6bn, almost double December’s increase of £0.9bn, yet remains low compared to historical levels.

Meanwhile, lending to non-financial companies slipped slightly by £0.3bn, following the fall in December of £3.4bn.

Lending to non-financial companies is down £1.7bn over the last six months. “Business demand remains subdued,” the BBA said, “so contractions in lending in several company sectors continue, but at slower rates.”

And there was no increase in appetite for borrowing in the BBA’s consumer credit findings, with a net repayment of £217m in January.

In December £310m of credit was repaid by consumers, the BBA reported.

“There remains limited availability of unsecured credit from banks,” Archer said.