The subdued mortgage market is showing little sign of stirring, and levels are actually falling from 12 months ago.
Figures from the British Bankers' Association (BBA) – which represents two-thirds of all mortgage lending carried out in the UK – have revealed that gross mortgage lending of £7.6 billion in May was lower than the last six month average and 13% lower than the same point in 2010.
The number of approvals for house purchases was 67,309 last month, slightly higher than April, but down by 15% on May 2010.
It was a similar story in the remortgage market as May saw a slight rise on April, but the figure of just more than 21,500 was well down on the previous six month average of 24,571.
The trend of falling remortgage activity is likely to continue as the prospect of an increase in the base rate fades against a backdrop of weak economic data.
Approvals for equity withdrawal also continue to be subdued and were 20% lower than in May 2010.
Away from the mortgage market, demand for unsecured borrowing remains weak, with consumers looking to pay off their debts, rather than take on more credit.
There was also a failure to expand lending to businesses, despite the Government's warning that credit needs to be more readily available to firms that want it.
The BBA said that demand has remained subdued in the market and that repayments are outstripping new borrowing levels.
"Consumer spending was flat in May after the boost Easter and the Royal Wedding provided in April," said David Dooks, statistics director for the BBA.
"Money is still tight and people continue to pay off debt rather than save or borrow.
"Companies in general are holding back on investment or expansion based on bank finance until the economic climate improves."
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