Mortgage lending slumps year-on-year - Money - News - Moneyfacts

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Mortgage lending slumps year-on-year

Mortgage lending slumps year-on-year

Category: Money

Updated: 23/02/2011
First Published: 23/02/2011

MONEYFACTS ARCHIVE
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Mortgage lending has limped into the new year, with figures showing approvals for house purchases have fallen by almost a third year-on-year.

The number of loans approved for buying a home fell by 29% in January compared with the same month in 2010, according to figures from the British Bankers' Association (BBA).

Just 28,932 loans were approved by the BBA's members, which include the six largest retail lenders in the UK – Santander, Barclays, HSBC, Lloyds, Northern Rock and Royal Bank of Scotland.

"We are seeing little change in the borrowing environment for households or businesses at the start of 2011," said David Dooks, statistics director at the BBA.

By contrast, activity in the remortgaging market rose by more than a quarter (28%) in January compared to the same month a year ago.

Just more than 26,100 remortgage applications were approved in the month, which was also a rise of 5% from December.

With much speculation that the base rate could be about to rise, the figures would suggest that borrowers are looking to secure a competitive mortgage deal before the fiscal measure is increased.

"The high street banks have seen more remortgage activity of late as people look to fix costs," Mr Dooks confirmed.

Other figures show that people are increasingly looking to save rather than borrow.

Demand for personal loans has fallen by 5.8% over the last year, while demand for unsecured credit has dropped by 2.0% over the same time.

Deposits into savings accounts have risen by 5% year-on-year, despite the tough economic conditions and high inflation.

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