Mortgage lending continues to weaken

June’s mortgage lending, rising by £3.8 billion, was weaker than in May with a record low number of house purchase approvals, though levels of remortgaging were similar to the previous month, the British Bankers Association has reported.

Mortgage approval activity continued to decline during June, particularly for house purchase and gross lending in the month was 5% lower than in May and 23% lower than a year earlier.

Net mortgage lending in June was weaker than the recent trend and 29% lower than the rise of £5.4 billion a year earlier.

Approvals for remortgaging in June accounted for a record 55% of all mortgages approved compared to just 19% for house purchase. Approvals for house purchase again fell to a record low and they continued to be well down on the same period a year earlier. Meanwhile, approvals for equity withdrawal & other purposes remained similar to the previous month.

BBA statistics director, David Dooks, said of the latest data: “Another record low number of mortgages approved by the banks for house purchase means that the whole market is likely to be at its least active since the early 1990’s. However, even in this rapidly slowing market, net lending has still grown by 12% over the past year and there continue to be significant numbers of people remortgaging with the banks.

The pressure on household finances is being reflected in subdued consumer borrowing, with spending on cards lower than of late and borrowing on personal loans and overdrafts being comparatively weak.”