Contradictions in bank lending continue

However, net mortgage borrowing was minus £0.1 bn in July, averaging minus £0.3bn over the six months prior to July.

Higher capital repayment (including homeowners moving between lenders) continues to generate these contractions in borrowing stocks seen over the past year and explains the subdued picture of net borrowing.

Commenting, BBA statistics director David Dooks, said: “Mortgage activity has strengthened during 2013 with the help of Government schemes but high repayments and redemptions mean, however, that we are not seeing increases in net mortgage borrowing for the high street banks.”

The number of approvals for house purchase and remortgaging continued the stronger pattern seen since the turn of the year and were some 31% and 40% higher, respectively, than equivalent months last year.

Assistance schemes for mortgage lending are also helping more first-time buyers and housing chains generally.

Approvals in July for loans other than house purchase or remortgaging continue to be stable, reflecting lower available equity or homeowners reluctant to take on extra borrowing.

Jeremy Duncombe, director, Legal & General Mortgage Club, said: “It’s a sure sign of improved confidence in the market that lenders have a bigger appetite to lend and it’s a great time for the consumer to take advantage of historically low rates in the knowledge that Mr Carney expects rates to remain low for some time to come.

“As lending figures increase, recent CML figures have also shown that more people are looking to mortgage brokers for advice with their biggest purchase. Intermediaries accounted for to 57.5% of all mortgages in Q2 – up from 53.5% in Q1 – highlighting the importance of the sector.”

Jonathan Harris, director of mortgage broker Anderson Harris, said: “The mortgage market continues to improve as buyers and those remortgaging are attracted by lower rates and easing criteria.

“One trend which shows no signs of abating is that borrowers who can afford to do so continue to overpay on their mortgages, taking advantage of record low interest rates, and are paying down debt where they can. This is sensible: why leave savings languishing in accounts paying poor rates of interest when you can reduce your borrowing?

“While confidence may be growing in the housing market, there is a reluctance to take on extra borrowing while we still have an uncertain economic and jobs climate.

“While lending volumes are improving, we remain some way off a sustained recovery in the housing market as caution continues to prevail and transactions are far lower than they were at the height of the boom years.

“However, mortgage brokers and estate agents are still reporting a high level of enquiries and we expect these to continue to feed through to improved official figures in coming months.”