Gross mortgage lending dropped 8 per cent in January, from £8.4bn in December down to £7.7bn.
Figures from the British Bankers’ Association today show gross mortgage lending came in higher than the six month average of £7.6bn but adverse weather conditions impacted lending in January.
The value of overall mortgage approvals fell from £8bn to £7.4bn. The number of approvals fell 7 per cent, from 61,204 in December to 57,057, while the average house purchase approval dropped from £152,000 to £145,300.
Approvals in January for remortgaging fell from 17,293 to 15,188, taking the value of remortgage approvals from £2.4bn to £2.2bn.
BBA statistics director David Dooks says: “January’s severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses. While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer.”
Markit chief economist Chris Williamson says the BBA’s figures indicate there was little evidence of the government’s Funding for Lending Scheme driving more bank lending in January.
In particular he points out that mortgage approvals were down some 14 per cent on a year ago. At 57,057, mortgage approvals are still running at almost half the level they were before the financial crisis. In the 14 years leading up to mid-2007, approvals averaged 99,000.
He says: “The scheme is seen as a key element of the government’s economic growth initiative, designed to encourage the banks to increase their lending to both households and businesses. However, the data for January showed non-financial sector businesses repaid a net £0.2bn of loans while net mortgage borrowing by households rose a mere 0.2 per cent compared to a year ago.”