House purchase approvals dropped markedly in January by over 10,000 to fall to 35,083, according to the latest figures from the British Bankers’ Association.
The BBA statistics, which record lending levels for the main high street banks, show that the number of January house purchase approvals was down from 45,650 in December and was also down against the average of 42,582 approvals over the last six months.
Approvals in January plummeted after being boosted in December ahead of the removal of the Stamp Duty holiday.
The BBA says the drop in approvals may also reflect January’s bad weather.
Remortgage approvals for January also fell to 20,252, from 23,609 in December and remains below the previous six-month average of 23,451.
Gross mortgage lending weakened in January to £8bn from £10.9bn the previous month.
David Dooks, statistics director at the BBA, says: “After the Christmas period demand for consumer credit was weaker in January, as consumers shiedaway, or were discouraged by the weather, from retail spending and held on to their deposits.
“The total amount lent to non-financial companies of £340bn continues to contract, as demand for finance remains subdued and trading conditions are still adversely impacting on business sentiment.”
Andrew Montlake, director of brokerage Coreco, says he expects to see stronger figures for February before lending tails off again towards the second half of the year.
He says: “Many consumers have put their lives on hold for two years and increasingly seem to have decided that now is the time to make that move, or hedge against future rate rises.
“As competition has seeped slowly back into the market, lenders are being forced to look beyond the 60% LTV and below market, which is now saturated.
“They are starting to venture into higher LTVs and are even returning tentatively to the buy-to-let arena in search of higher margins.”
But he adds: “Let’s not be under any illusions here, the mortgage market, like the economy, is still in the early stages of recovery and could be set off course by any number of external factors.”