Home loans at lowest level since 2001

MORTGAGE lending sunk to its lowest level for eight years in April, data showed yesterday.<br /><br />Net lending by the major banks was &pound;2.7bn during April, down from &pound;3.4bn in March &ndash; the lowest figure since March 2001, according to the British Bankers Association (BBA).<br /><br />However, the number of mortgages approved for house purchases actually rose to 27,685 in April from 26,671 in March. While the number is 15.5 per cent down on the year, the total marks the smallest annual decline since August 2007 when the credit crunch hit. The BBA said the figures suggested the mortgage market may be stabilising.<br /><br />But IHS Global Insight economist Howard Archer was less positive: &ldquo;The BBA data reinforce our belief that the pick up in housing market activity will be gradual and fitful for some time to come given ongoing very poor economic fundamentals and still tight credit conditions,&rdquo; he said.<br /><br />Separately, YouGov&rsquo;s May inflation expectations survey, also released yesterday, shows that the general public&rsquo;s perception of price increases has begun to ease, falling to 1.6 per cent for the year ahead from 1.8 per cent in April.<br /><br />&ldquo;Ultra-low policy rates, quantitative easing, surging fiscal deficit and rising import prices seem to be helping to ensure that recession and negative RPI inflation do not cause a widespread shift to expectations of ongoing deflation,&rdquo; said Citigroup economist Michael Saunders.<br /><br />Long-term inflation expectations however remain above the Bank of England&rsquo;s two per cent target.<strong><br /><br />FAST FACTS</strong> BBA MORTGAGE DATA<br />&9679; Re-mortgaging approvals fell to 25,418 last month, down 63 per cent on the year and their lowest since December 1999.<br /><br />&9679; Approvals for housing equity withdrawal fell 39 per cent on the year to 19,409.