Gross mortgage lending dropped 8 per cent in January to £7.7bn, down from £8.4bn in December, according to figures from the British Bankers’ Association.
The BBA says gross mortgage lending came in higher than the six-month average of £7.6bn, but adverse weather conditions impacted lending in January.
The value of overall mortgage approvals fell from £8bn to £7.4bn, while the number of approvals fell 7 per cent from 61,204 to 57,057.
The average house purchase approval dropped from £152,000 in December to £145,300 last month.
Approvals in January for remortgaging fell from 17,293 to 15,188, taking the value of remortgage approvals from £2.4bn to £2.2bn.
BBA statistics director David Dooks says: “January’s severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses. While general economic growth stalls, low consumer and business confidence generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer.”
Markit chief economist Chris Williamson says: “There was little evidence of the Government’s Funding for Lending scheme driving more bank lending in January. The scheme is seen as a key element of the Government’s economic growth initiative, designed to encourage the banks to increase their lending to both households and businesses.
“However, the data for January showed non-financial sector businesses repaid a net £0.2bn of loans, while net mortgage borrowing by households rose a mere 0.2 per cent compared to a year ago. Mortgage approvals were down some 14 per cent on a year ago. At 57,057, mortgage approvals are still running at almost half the level they were before the financial crisis. In the 14 years leading up to mid-2007, approvals averaged 99,000.”