Mortgage lending rose at its slowest rate for nine years during April as housing market activity remained subdued, figures showed today.
Net lending, which strips out redemptions and repayments, was just £1.83 billion during April, the lowest level since February 2001, according to the British Bankers' Association.
The low figure did not come as a surprise as mortgage approvals have been depressed since the turn of the year due to a combination of the end of the stamp duty holiday, the severe winter weather and the uncertainty created by the general election, all of which have limited activity in the housing market.
The BBA said mortgage repayments were also particularly strong during April, as banks actively encouraged borrowers to use their spare cash to pay down their loan.
But economists have speculated that the drop in lending seen this year may be down to more than these one-off factors, and could indicate that the housing market recovery has run out of steam.
Mortgage approvals for house purchase remained low during April at 35,729, up marginally on the previous month's figure, but well down on the 45,822 seen in December.
At 21,580 the number of people remortgaging was only slightly ahead of October's 10-year low, as many homeowners continued to be better off sitting on their lenders' standard variable rate, rather than switching to a new deal.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "The ongoing muted BBA mortgage approvals data reinforce our suspicion that house prices will struggle to make significant gains over the coming months.
"Although it may be starting to pick up modestly from its early-2010 lows, housing market activity is limited, the economic fundamentals are still far from robust for the housing market, credit conditions remain tight, and house price/earnings ratios have moved back up.
"Very significantly, more properties are coming on to the market thereby moving the supply/demand balance more in favour of buyers."
Unsecured lending also remained subdued during the month, with people repaying £338 million more than they borrowed.
Within the total, credit card lending edged up by £169 million once interest and charges were included, despite consumers continuing to repay more than they spent during the month.
Demand for personal loans was 18% lower than it had been a year earlier, with borrowing through loans and overdrafts contracting for the 12th consecutive month, as repayments outstripped advances by £507 million.
But savings levels were subdued, with consumers increasing their deposit levels by just £399 million, down from £5.35 billion in March, despite the end of the ISA season coming during April.
David Dooks, BBA director of statistics, said: "Households' priorities are clearly reflected in these latest data, with people paying down debt rather than building up savings.
"Uncertainties about the impact of Government policies and the economy on households and businesses will continue to dent consumer confidence and influence decision-making."