In December 2009 gross mortgage lending was inflated by borrowers bringing loans forward ahead of the increase in stamp-duty in January 2010. Though lower in December 2010, gross lending of £7.9bn was in line with the amounts seen in recent months.
Bank mortgage repayments continued to be fairly strong in December reflecting more remortgage approvals in recent months. House purchase approvals were marginally lower in December. The annual total of just under 400,000 approvals was some 10% lower than 2009.
The average value of house purchase approvals by banks (£143,300) fell slightly but was 1.6% higher than a year ago. Numbers of remortgage approvals in December were slightly stronger than the recent six-month average but for 2010 as a whole were some 7% lower than 2009.
Commenting, BBA statistics director, David Dooks said: "The main banks' net lending rose by £20bn in 2010, in contrast to lending by all other lenders which decreased by around £12bn. However, mortgage demand was weak throughout the year, with 10% fewer loans approved than in 2009.
“Unsecured credit demand was also weak during last year, with net lending reducing by £2bn as households adopted a lower appetite for credit due to the uncertain environment for employment and the economy.”
Nick Hopkinson, director of PPR Estates, said these figures reflect a bleak outlook: “Any claimed growth in mortgage lending by the high-street banks last year is simply a result of them taking market share off other lenders,” he said.
“While the big banks are competing aggressively to lend to borrowers with perfect credit scores, huge deposits and small percentage loan requirements, the mortgage famine continues unabated for most potential homebuyers. Any claimed increase in finance availability from the big banks is therefore a nil-sum gain for the overall mortgage market and normal homebuyers’ perspective.
“Even from the high-street banks approvals for all types of mortgage loans continued to dwindle in December 2010. This is a depressing forward indicator for the state of the UK housing market. Regardless of borrower demand, I see no real evidence that lending availability will increase meaningfully this year against a backdrop of surging inflation, austerity cuts and a very uncertain economy.
“Mortgage rationing is now ‘the norm’ and will stay with us till the banks have discreetly rebuilt their battered balance sheets over the next few years. House prices will also remain under severe downward pressure this year.”
