Eight-year low for mortgage lending

Mortgage lending fell to an eight-year low last month as many homeowners decided against remortgaging due to the lack of affordable deals on offer.

The British Bankers' Association said net lending by major banks was at its lowest level since March 2001 totalling just £2.7 billion.

However, there was further evidence that house purchase activity is picking-up pace, as the number of mortgages approved for house purchase increased to the second highest figure in just over a year.

As buyers tentatively returned to the market, 27,685 mortgages were approved for those buying a new property during the month, which was a 4% rise compare to March and only 16% down on the same period a year earlier.

Meanwhile, the average value of a UK mortgage plunged to £129,100 last month down from £155,100 in April last year. The steep fall mirrored the huge decline in house prices seen over the past 12 months in the UK.

The number of people remortgaging in a bid to get a better deal was down for the fourth consecutive month and was close to hitting a 10-year-low.

Only 25,418 remortgage loans were approved in April, as historically low interest rates saw many homeowners postponing any plans to remortgage and staying on their lender's standard variable deal.

The latest figures also revealed a further fall in mortgage approvals for equity release and buy-to-let properties last moth.

The value of all mortgages approved fell slightly in April to £7.2 billion, after being dragged down by falling remortgage activity despite the value of approvals for house purchase rising.

British Bankers' Association (BBA) director of statistics, David Dooks said: "The house purchase part of the mortgage market appears to have stabilised, with slightly more approvals coming through, although April's weak net mortgage lending reflects the lower number of approvals in previous months.

He added that consumer behaviour, both in the housing market and in generating only low demand for new personal loans, was being affected by the uncertain financial circumstances facing many UK households.

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