According to the British Bankers’ Association, gross mortgage lending of £7.9bn in April was unchanged over the past six month average but 5% lower than gross lending in April 2010.
Despite the weakness in both house purchase and remortgaging approvals, gross mortgage lending remained stable.
Net mortgage lending increased by £1.3bn in April as repayments continued at a fairly high level.
House purchase approvals were slightly lower than in March and 18% lower than in April 2010. The average value (£145,100) was 1.1% lower than a year earlier.
The numbers of remortgage approvals in April were 12% lower than the previous month and 7% lower than in April 2010 as fears of interest rate rises receded.
Approvals for equity withdrawal continue to be subdued and were 22% lower than April 2010.
Commenting, David Dooks, statistics director at the BBA, said: “Individuals and businesses continue to save more, pay off debt and borrow less as uncertainty about the economy has entrenched a wait and see attitude.
“However banks are still able to meet the need for home loans even though demand remains weak. Businesses – small and medium enterprises in particular – are using cashflow and deposits to fund expenditure rather than taking on more borrowing.”
Jonathan Moore, director of easyroommate.co.uk, said: “The drop in house purchase lending in April is another blow for first-time buyers in what has been a torrid spring.
“House prices remain unaffordably high, and the cost of living is soaring. With lenders requiring would-be borrowers to save up deposits in excess of £25,000 at a time when rents are at a record high, it’s no surprise that tens of thousands of first-timers are struggling to get onto the property ladder.
“As the private rental sector groans under strain of the influx of frustrated buyers, demand for rental accommodation has become so strong that the average cost of renting a room is now more than £400 per month – a 6% rise in the last year alone.
“But the pressure on rented accommodation won’t ease until lenders up their commitment to new lending, and provide first-time buyers with the help they need to buy their first home.”
David Whittaker, managing director of Mortgages For Business, said: “Overall consensus among the general mortgage borrowing population is ‘let’s wait and see’ so lending will continue to bump up and down for the foreseeable future.
“A lot of owner-occupiers are paying down their mortgages and putting disposable income into savings, despite the feeble savings rates, because of their uncertainty over the future of the economy.
“One section of borrowers sitting relatively comfortably though is professional property investors. Buy-to-let finance is back in a big way and the more complex the deal the more return an investor is likely to see.
“Complex deals aren’t for everyone though and there are plenty of other deals to be had but with so many having to rely on the private rental sector and with that trend unlikely to change for many years, professional landlords have a real opportunity to capitalise on the situation.”
