House purchase mortgages were 43,870 in February, up slightly from 43,732 in January, says the British Bankers’ Association.
Remortgaging decreased to 72,193 from 79, 926 in January while equity withdrawal increased to 40, 669 from 39, 477.
The share of remortgaging is now close to half of all approvals.
BBA says that by contrast, house purchase approvals have been fairly constant and low for the last five months and despite ticking up slightly in February loans for equity withdrawal have continued to trend downwards.
BBA says that gross lending was slightly weaker than January but stronger than the recent average partly reflecting very strong remortgaging approvals, which feed through to gross lending much sooner than approvals for house purchase,
Net mortgage lending was stronger in February, reflecting lower repayments. BBA says the annual growth rate has stabilised around 13 per cent in recent months.
BBA statistics directors David Dooks says: “In an environment of tightening lending criteria, re-mortgaging, either to fix, re-fix, or reduce borrowing costs, has been a clear influence on mortgage data in the first two months of this year, resulting in mainstream lenders picking up market share. Despite the relative pick-up in February’s reported retail sales, consumer credit and cards in particular, continued to be subdued.”
RICS chief economist Simon Rubinsohn adds: “The modest pick up in mortgage lending in February reflected in BBA data released today is unlikely to be sustained. Buyer enquiries (according to the latest RICS survey) have slipped back to the lows seen in the wake of the Northern Rock crisis and this trend is likely to persist through the spring. The recent sharp rise in Libor rates is indicative of the reluctance of banks to lend to each other and suggests that mortgage finance will remain in short supply for some time to come.
“Re-mortgaging levels still remain strong which in part reflects the ending of a large number of fixed rate mortgage deals. However, with lenders scaling back on loan to value ratios we expect a further drop in mortgage equity withdrawal over the coming months. This is likely to hit homeowners looking for cheaper sources of credit to finance big ticket purchases.”