BBA: Mortgage borrowing dips in March

Net mortgage borrowing from the banks fell by 0.1% over the year to March, according to the latest BBA data. The outstanding level of unsecured borrowing contracted by 1.6% over the last year.

Related topics:  Mortgages
Amy Loddington
24th April 2013
Mortgages
Gross mortgage borrowing of £7.6bn in March was below the recent monthly average.

March saw mortgage approvals for house purchase and remortgaging edging up back to levels in March last year. The expectation of more first-time buyers looking to enter the market in 2013 will help mortgage chains in due course. The average house purchase approval rose to £152,500.

Approvals in March for other loans were some 34% lower than in March 2012, no doubt reflecting lower levels of equity available and reluctance to take on extra borrowing.

BBA statistics director, David Dooks said:

“The Funding for Lending Scheme has made the mortgage marketmore competitive – allowing smaller institutions to offer attractiverates. But nevertheless the main high street banks still provide 60% of new mortgage borrowing.

“Mortgage approvals edged up back to levels of a year ago and the prospect of more first time buyers entering the market during 2013 is likely to help mortgage chains in due course. However, economic uncertainty and subdued confidence continues to determine borrowing behaviour, with households and businesses reducing borrowing and building up deposits where possible.”

Duncan Kreeger, director at peer-to-peer lender West One Loans, comments:

“Sadly, lending by BBA member banks is still struggling.  Lending is down against last month and last year, and it’s still a staggering 63% beneath the pre-crisis peak.  But this is all in the context of unprecedented support and subsidy.  Of the 22 members of the BBA, 14 have benefitted from a taxpayer bailout, and all 22 have made use of the specially-tailored cheap money from Funding for Lending.  Widening FLS to include non-banks is a step in the right direction, but Funding for Lending is still a subsidy for established lenders.  Financial markets need to be more flexible, not more bureaucratic.

“It’s particularly disappointing to see yet another drop in business lending, especially since alternative business lending is expanding rapidly.  Our latest Broker Sentiment Survey shows an unprecedented hike in alternative business finance.  Alternative finance can deliver funds in a matter of hours, not years, and doesn’t need government support at all.  High street lenders are struggling to keep up.”
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