The annual growth in the banks’ net mortgage lending was 4.3% in April according to the British Bankers Association (BBA), slightly lower than March’s 4.5% growth rate.
But the April figure still substantially exceeds annual growth of just 1% in March for the mortgage market overall.
Statistics from the banking trade body show that subdued spending has led to consumer credit contracting by 2.6% over the year.
Gross mortgage lending of £8.2bn in April was lower than both March and the average of the previous six months (£9.1bn).
Repayments were stronger than usual, which the BBA said was due to banks actively encouraging borrowers to use surplus cash to reduce their borrowing where possible.
As a consequence, net mortgage lending grew by only £1.8bn in April compared with £2.3bn in March, and was below the previous six month average.
The numbers of approvals for house purchase, though higher than the same point a year ago, are low when compared to historical trends. The average value of house purchase approvals (£146,700) was 11.7% higher than a year ago.
Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Numbers of card purchases in April were down on the six-month average and much in line with the retail sales picture. Growth in card borrowing remains stable and reflects the fact that spending plus interest exceeds repayments. Demand for personal loans remained at a low level, with new loans in April some 18% lower than the same month a year earlier.
Growth rates for lending to non-financial companies all edged slightly upwards in April despite net lending still contracting, as company demand for borrowing remained subdued. The construction sector continues to show the largest annual contraction, with the sector’s borrowing almost 21% lower than a year ago.
BBA statistics director, David Dooks, said: “Household priorities are clearly reflected in these latest data, with people paying down debt rather than building up savings, even in the main ISA season. Uncertainties about the impact of government policies and the economy on households and businesses will continue to dent consumer confidence and influence decision-making.
“Overall lending to companies remains subdued, although the annual rate of contraction appears to have bottomed out.”
