The British Bankers’ Association (BBA) has reported that gross mortgage borrowing in March was £10.1 billion, 6% lower than in the same month last year.
Despite slower demand in the second half of 2014, the overall mortgage stock is 1.1% higher than a year ago.
The BBA said that house purchase approvals are trending upwards. Though March was 14% lower than last year, the first quarter of 2015 has seen higher demand.
Remortgaging and other approvals also increased in March, albeit some 10% and 26% lower respectively than a year ago. Approvals overall were therefore slightly higher than in February, but some 14% lower than the same time a year ago.
Richard Woolhouse, chief economist at the BBA, said: “We’re starting to see signs that businesses from many sectors are starting to borrow more from their bank. While it’s still too early to predict, these figures and the latest data from the Bank of England suggest that business borrowing has turned a corner.
“Savvy savers appear to be continuing to take advantage of good deals, such as pensioner bonds, which is why we’re seeing weaker bank deposits.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “House purchase approvals are trending upwards with higher demand seen in the first quarter of the year. While numbers are down on the same month last year for house purchases and remortgaging, that was a frenzied time for the market and we now see a more considered phase, which is also likely to be more sustainable.
“Borrowers are taking advantage of record low mortgage rates and the signs are that these will continue to be competitive over coming months. Lenders have ambitious targets for the year and in order to achieve them will either have to compete on rate or loosen criteria. While many are not yet prepared to do the latter, they are tightening margins and cutting rates across the loan-to-value curve.
“As well as cheaper mortgages at higher LTVs providing a boost for first-time buyers, government schemes are proving hugely successful, assisting those further up the chain as well as it helps keep everything moving smoothly.
“The lack of inflation means a rate rise this year is highly unlikely and could even have been pushed back for 18 months to two years. Crucially, when rates do edge up, the Bank of England has hinted that they will do so very slowly, eventually stabilising at around 1.5% to 2% – much lower than we have been used to. Fixed rates are proving hugely popular – not so much because of the risk of a rate rise but because they are unbelievably cheap.”