High street banks report slump in mortgage lending

Mortgage approvals for house purchase by Britain’s high street banks dropped 14% last month, compared with January last year.

There were 32,388 house purchase approvals in January, down from 33,440 in December.

The British Bankers Association said that approvals for remortgaging were also down – by 28%. There were 15,188 remortgage approvals.

Instead, there was evidence that consumers were becoming keener on paying back money than borrowing it.

Gross lending in January by the high street banks was £7.7bn, down from £8.4bn in December, while capital repayment in January was £8.2bn – up from £8.1bn in December and up from the average monthly capital repayment of the last six months of £7.6bn.

The BBA said that bad weather had something to do with it.

Statistics director David Dooks said: “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 retrain borrowing appetite, repay borrowing where possible, and to build up cash and savings as a buffer.”

David Brown, commercial director of LSL Property Services, said: “We are seeing a cautious approach to mortgage debt taken by many current borrowers. With monthly mortgage payments at historic lows, thousands of borrowers are overpaying their mortgage while they can, ahead of higher mortgage payments when rates do eventually rise.”

Duncan Kreeger, chairman of peer-to-peer bridging lender West One Loans, said the lending figures had nothing to do with the weather. “Weather is for wimps,” he declared.

He said: “It isn’t down to the weather. It was cold last January too. The reason lending is down is because the high street consistently disappoints potential borrowers.

“Only last week the Council of Mortgage Lenders revealed mainstream lending falling off a billion pound cliff. Mainstream lending is almost 10% below even the sleepy Christmas period.”