BBA statistics director, David Dooks said:
"January saw the high street banks approve more mortgages for house purchase than of late, despite low household confidence, as some people try to complete transactions before the stamp duty holiday ends in March. Demand for unsecured personal borrowing remains low as consumers continue to repay debt.
"Business borrowing remains generally subdued as challenging trading and market conditions continue to suppress demand”.
Unsecured lending contracted by 1.6% over the 12 months to January, while personal deposits rose by 3.1%, down from the 4.9% growth seen over the year to January 2011.
Gross mortgage lending of £8.3bn in January 2012 was 2.2% more than in January a year earlier and the same level as the recent six month average. Capital repayment by householders remains at a high level, resulting in a net mortgage lending increase of only £0.7bn in January.
The number of house purchase applications approved in January 2012 was the highest seen for two years and 34% higher than in January 2011. This strength reflects first time buyers taking advantage of the stamp duty exemption before it ends in March. Remortgage approvals remain at similar levels to recent months.
The average house purchase mortgage (£144,400) was slightly higher than a year earlier.
Approvals for other secured lending in January continued to decline, being some 2.4% lower than in January 2011.
New spending on credit cards of £7.1bn was above the recent six month average, though as regularly seen, monthly spending is more than offset by repayments.
Demand from consumers for loans and overdrafts remained weak with repayment of loan and overdraft borrowing continuing to outweigh new lending resulting in a continued annual contraction.
As market surveys suggest a poor start to 2012, demand for borrowing from industry remains subdued as economic concerns and low confidence impact business borrowing behaviour.
William Hunter, of Hunter Wealth Management said:
"The stamp duty holiday is clearly creating a surge in demand, but that's all it will be. Beyond March the mortgage market is likely to click back into its default mode of flat. Welcome though this boost is, by definition it is finite.
"On a positive note, this at least shows that certain focused tax measures can drive activity and stimulate a market. In relation to debt generally, the theme remains much the same: people are keen to manage it down.
"Debt, the deity of the nineties and much of the noughties, is now anathema to the man in the street. Only once the economy and jobs market improve will we see the property market spark in any material way."
Nick Hopkinson, Director of Property firm PPR Estates said:
“The high street banks approved a mere 23,392 house purchase loans in January 2012. This is down over 50% on the normal market levels we were seeing pre-credit crunch, even though the main banks have been taking market share off building societies and other lenders in the last couple of years. 25%-plus deposits and perfect credit scores remain essential if you want to borrow money at the moment which rules many prospective buyers out.
"When you consider that two of the biggest high street lenders, Lloyds and RBS, are currently tax-payer owned and in theory have almost infinite reserves to lend from, this is a damming indictment on banker activity to support the economy – just when struggling homeowners need money most.
"Lending to small businesses is also shrinking as the same group of bankers fail in their civic duties in supporting this crucial part of the wider economy as well.
“With stamp duty on first-time buyer homes set to return to 1% for all purchases above £125,000 very soon it seems things are not going to get any easier for the housing market. Growing unemployment, shrinking household incomes due to spiralling personal inflation, further ‘hot’ money from QE driving inflation and the wider economic uncertainty around the Euro zone will continue to put downward pressure on house prices for the foreseeable future. It seems very unlikely the Chancellor will be able to ‘save the day’ with his budget next month.”
