Gross mortgage borrowing of £7.8bn in February was above the recent monthly average, according to latest data published by the British Bankers’ Association (BBA).
Historically, the difference between gross borrowing and capital repayment produced positive net borrowing data
each month. With lower levels of gross borrowing and high capital repayments being maintained as a benefit of interest rates remaining low, net borrowing gradually reduced to a flat balance through much of 2012, the BBA said.
In February, mortgage approvals for house purchase were 6% lower than in February last year. 2012 ended with reports of more first-time buyers looking to enter the market, which will help mortgage chains in due course. The average house purchase approval rose to £150,500.
Approvals in February for remortgaging and other loans were some 15% and 38% respectively lower than in February 2012.
“Banks continue to support household borrowers, providing almost £8 billion of mortgage lending in February,” said BBA statistics director, David Dooks said.
“But low interest rates allow homeowners more scope to increase repayments on their mortgages and reduce the outstanding amount.
“Annual growth in unsecured borrowing on credit cards and personal loans has edged up over recent months, albeit remaining subdued.”
Peter Williams, executive director of IMLA, said the fact that approvals for house purchases, remortgaging and other loans have each fallen year-on-year shows once more how important it is to open the door of the Funding for Lending Scheme to the non-banking sector.
He said: “Optimism was high at the turn of the year that great strides would be seen in total gross mortgage lending for 2013, particularly after four consecutive months of increasing purchase mortgage approvals by the main High Street banks. However in the first two months of the year we have seen almost £1.4bn less purchase mortgage lending and more than 7,500 fewer purchase loans approved, compared with last year.
“It is understandable that many banks are sticking to their tight criteria in the current climate, but inviting the non-banking sector to access incentivised funding would be one way to help lenders deliver more for UK borrowers.”
