According to the latest data from the British Bankers Association (BBA), gross mortgage lending of £8.7bn in March was less than the average of the previous six months (£9.2bn) and 0.4% lower than in March last year.
Repayments were stronger than usual as banks actively encouraged borrowers to use surplus cash to reduce their borrowing where possible. As a consequence, net mortgage lending grew by £2.4bn in March compared with £2.7bn in February, and was below the previous six month average.
The effects of the year-end change to stamp duty have now worked through, so although numbers appear subdued compared to the latter months of last year, house purchase approvals were some 20% higher than in March last year. The average value of house purchase approvals (£146,100) was 11.8% higher than a year ago.
Numbers of remortgaging and equity withdrawal approvals continue to be lower than a year earlier.
Commenting on the latest data, BBA statistics director, David Dooks, said: “Low interest rates continue to influence customer behaviour. Homeowners are reducing mortgage debt by making, or maintaining, higher repayments using the extra cash generated by lower mortgage rates. People are also holding more cash in their everyday accounts, rather than building up savings accounts and overall unsecured borrowing levels are standing still.
“Uncertainties in business trading are constraining company demand for finance, with large corporate sectors still seeing contractions in borrowing.”