Bank approvals down almost a third year on year

The annual growth of the banks’ net mortgage lending was 2.7% in January, remaining ahead of the 0.7% for the whole mortgage market in December.

Gross mortgage lending of £8.2bn in January was slightly higher than the recent six month average of £8bn and 2% higher than gross lending in January 2010. Net mortgage lending increased by £1.6bn in January.

Numbers of remortgage approvals in January were 5% higher than the previous month and 28% higher than in January 2010.

Approvals for equity withdrawal continue to be weak and were 7.8% lower than January 2010.

Commenting, BBA statistics director, David Dooks said: "We are seeing little change in the borrowing environment for households or businesses at the start of 2011.

“The high street banks have seen more remortgaging activity of late as people look to fix costs. The banks’ mortgage lending growth continues to exceed the rest of the market.”

Paul Hunt, managing director of Phoebus Software said: “These figures from the BBA show that the mortgage market is still nervous about the UK’s economic future.

“While net lending rose in January, this was by no means a lending tsunami. With the impact of public spending cuts on unemployment and borrowers’ finances still uncertain, it’s far too early to start taking small increases in lending as signs of an ongoing recovery in the market.

“Lenders are still primarily concerned about repayments rather than growth and until the economic future looks more certain, this will remain the case.”