Gross mortgage borrowing of £7.8bn in April was marginally below the recent monthly average. 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 low interest rates, net borrowing has remained weak over the past year.
The volumes of mortgage approvals for house purchase and remortgaging continued to edge up in April. Schemes to assist the mortgage lending market are expected to help more first-time buyers and mortgage chains in due course. The average house purchase approval rose to £155,900.
Approvals in April for other loans were some 37% lower than in April 2012, no doubt reflecting lower levels of equity available and a reluctance amongst homeowners to take on extra borrowing.
Adrian Anderson, director of mortgage broker Anderson Harris, says:
"Mortgage approvals for purchases and remortgaging continued to edge upwards slightly in April as Funding for Lending continued to support the market. Mortgage rates continue to fall, offering cheaper options for borrowers. The BBA expects this to continue, with first-time buyers in particular benefiting under the scheme in coming months.
"Borrowers continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can. This makes sense - why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing instead? There is also a reluctance to take on extra borrowing because of the uncertain economic and jobs climate.
"The numbers demonstrate that we remain some way off a sustained recovery in the housing market as caution continues to prevail. However, mortgage brokers and estate agents report the highest level of enquiries seen since the downturn so we expect this to continue to feed through to improved official figures in coming months."
Duncan Kreeger, director at peer-to-peer lender West One Loans, comments:
“Some members of the BBA are trying to lend more. But sadly the results speak for themselves – particularly in mortgage lending. This month in 2007 saw the very same banks lending more than twice what they’ve managed in April 2013. Mortgage lending has suffered a 60% drop since this pre-crisis peak and even the most optimistic predictions don’t expect mainstream banks to take up that slack for perhaps a decade, if ever.”
Mark Blackwell of financial data specialists xit2, comments:
“Lenders are no longer quite so paralysed by fear. But recovering their pre-crisis coordination and flexibility will be a gradual process. Frail business lending in April clearly demonstrates that continued stiffness in a wounded and recuperating system. Part of the problem is the out-of-date technology. Improvements in the way lenders handle property risk, alongside technological innovation, is already giving some players an upper hand. And it’s more than a question of better customer service; banks who know all the ins-and-outs of their own balance sheets can actually lend more. As with the wider economic picture, it will be a gradual recovery for lenders.”
