Mortgage lending fell in March

Latest figures from the British Bankers Association (BBA) show that mortgage lending fell in March, halting the monthly rise in the number of mortgage approvals seen for the previous 3 months.

Gross mortgage lending was at its lowest since April 2001, at £8.9 billion.

The number of mortgage approvals for house purchase fell and were over 25% lower compared with March 2008, at 26,097.

With low standard variable rates available, borrowers are still tending to revert to their mortgage lender standard variable rate at the end of any fixed rate deals rather than change to a new mortgage product.

This has led to a small reduction in the number of remortgage approvals, as also seen in February.

David Dooks, BBA statistics director, commented that whilst banks are making funds available for people who meet their criteria, consumer confidence is fragile.

He added ‘The banks’ figures also show it would be unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic climate.’

It seems rising unemployment and ongoing concern about house prices in particular are going to have an impact on lending requirements for some time yet, even if more mortgage funding is made available by the banks.

That said, RICS (Royal Institution of Chartered Surveyors),  has today said that it ‘is not inclined to believe that the pick-up in activity in the housing market from historically low levels is already running out of steam’.

Simon Rubinsohn, RICS Chief economist added ‘The decision in the Budget to extend the stamp duty holiday alongside the extension of the credit guarantee scheme to include mortgages should help provide some much needed support for the lower end of the housing market.’