Banks increase lending by 12%

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Banks increased their lending by 12 per cent year-on-year in April, according to new figures.

The UK’s major banking group lent £12bn to borrowers in April, says the British Bankers’ Association.

This was significantly down the £17bn lent in March, but experts expected a dip after the rush to beat the stamp duty deadline.

Banks approved a total of 73,999 loans in April, which is some 3,500 lower than the average over the previous six months.

BBA chief economic adviser Dr Rebecca Harding says: “As expected, growth in mortgage lending has fallen back sharply on last month proving that March’s results were just a stamp duty spike. Net mortgage borrowing is nevertheless 3 per cent higher than a year ago.”

Jeremy Leaf, a former RICS chairman and north London estate agent, says: “The lending figures for April are not surprising but a little more encouraging than we thought because we expected them to be lower year on year. What the three per cent increase suggests is that investors are not the principal reason behind it. The underlying strength of the market is there.

“Of course the withdrawal of buy-to-let investors from the market in the second quarter will pull down transaction numbers going forward but the positive sign for the market is that first-time buyers – and other movers – are alive and kicking, and taking advantage of continued competitive mortgage rates. With the gap in rates on high loan-to-value mortgages compared with lower LTVs also narrowing, there is plenty to encourage first-time buyers into the market in coming months.”