Banks remain optimistic despite lending having fallen for the fifth consecutive month in December.
New figures from the British Bankers’ Association show a total of £10bn was advanced in December 2014, down 12 per cent from £11.4bn a year earlier. Further, December’s lending was the lowest since July and has fallen each month since then.
However, banks lent £130bn in 2014, meaning they retained a 63 per cent market share – which is unchanged from 2013.
But despite the winter lull, BBA chief economist Richard Woolhouse remains optimistic about growth in lending this year.
He says: “The mortgage market has been softening since the spring, but for customers taking out home loans right now there are some great deals and we expect the market to begin to grow again this year.”
Banks’ house purchase approvals plummeted 24 per cent from 46,930 to 35,667 between December 2013 and 2014.
Remortgages continued to lag in December, with a 20 per cent decline in approvals from 21,916 in December 2013 to 17,533 last month.
Enterprise Finance chief executive Danny Waters says the tail-off in lending towards the end of last year was down to election uncertainty and the on-going effects of MMR.
He says: “This is more than a winter dip. The decrease in gross mortgage borrowing in December can be partly attributed to seasonal factors at this time of year, but that doesn’t explain why it is 12 per cent down year-on-year.
“This significant reduction is more likely to be explained by pre-election uncertainty on behalf of buyers and sellers alike – and by lenders still getting to grips with how MMR has impacted their dealings with borrowers.”
The figures are taken from the six largest UK retail banking groups, including Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander and Virgin Money. They account for some two-thirds of UK mortgage lending.