According to the latest data from the BBA, gross mortgage lending of £7.9bn in May was below the six month average as the housing market continued to see subdued activity.
Historically, the difference between gross lending and capital repayment produced significant increases in net lending each month. With a stable level of gross lending, but a rising trend in capital repayment reflecting low interest rates, the difference has gradually narrowed to the point in May where repayment exceeded lending.
In May house purchase approvals were 3.4% lower than a year ago. The average house purchase mortgage approval stands at £165,300.
Numbers of remortgaging approvals were slightly lower in May compared with April and the same period a year before.
BBA statistics director, David Dooks said: "The high street banks’ total lending to households stands at £850 billion.
“They provide around two-thirds of all new mortgage finance but because at the same time, mortgage-holders are reducing their borrowing by repaying capital, the outstanding level of debt is changing little.”
Capital Economics said: "May’s mortgage lending data were unambiguously weak and offered further grounds for concern about the impact that the escalating eurozone crisis is having on both UK confidence and credit conditions."
