Home loans down again

BY DIANE COYLE

Economics Correspondent

Mortage lending by Britain's big banks slowed in February, adding to the evidence that the housing market is heading for an even deeper slump after the two mortgage rate rises since September

The British Bankers' Association said net mortgage lending rose £597m after adjusting for seasonal variations - nearly 9 per cent lower than the previous month's figure and 5 per cent down on the year.

Tim Sweeney, director-general of the BBA, said: "It is clear that confidence in the housing market remains low." With another reduction in mortgage interest relief imminent, he said it was surprising that lending had not been more depressed. The banks' mortgage loan book is 7 per cent higher than a year ago but the pace of growth is slowing significantly. There are signs this trend will continue.

The number of new mortgages approved by banks in February, 23,020, was lower than in the same month the previous year for the first time in six months. The same was true of the value of new loan approvals, at £1.13bn compared with £1.15bn the previous February. The average value of approved loans was £49,000, barely higher than a year earlier.

The bank lending details follow building society figures that showed an even sharper fall last month. New loans by building societies in February were 17 per cent lower than a year earlier.

The BBA banks - which account for almost all of bank mortgage lending - therefore held their own a little better than the building societies in February, although their respective market shares have been roughly stable for some months.

Ian Shepherdson, economist at HSBC Markets, estimates that the total number of new mortgage commitments by banks and building societies, after seasonal adjustment, fell to 70,000 last month - 12.5 per cent lower than in January.

He predicted house prices could have reversed last year's small gain by the middle of this year, and would fall more if the worst fears of rises in mortgage rates were realised.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific