No change in bank mortgage lending

However it still substantially exceeds the annual growth of just 0.9% in April for the mortgage market overall.

Commenting, BBA statistics director, David Dooks said: “High street banks are the main providers in the mortgage market, supplying 75% of all new lending and approving more than 35,000 loans for house purchase each month.

“The low interest rate environment is resulting in customers choosing to reduce or pay off borrowing, particularly personal loans, rather than saving.

“Lending to non-financial companies continues to be slow as demand for loans remains subdued.”

Commenting on the BBA’s figures, Andrew Montlake, director, independent mortgage broker, Coreco, commented: "Now that the Budget has been delivered and we know exactly what we are up against I would expect lending to continue to improve throughout the remainder of the year, albeit slowly. The May figures show a stable market but one that is at least moving in the right direction.

"Mortgage rates are lower than they have been for quite some time, competition is slowly returning to the market and the abolition of HIPs has meant that there are more properties available for sale.

"Remortgage activity, while remaining low, has slowly begun to improve as borrowers are increasingly tempted by low fixed rates.

"Even the buy-to-let market, now that Capital Gains Tax changes are not as bad as first feared, is looking positive."

Brian Murphy, head of lending at Mortgage Advice Bureau, commented: "The mortgage market is flatlining at present. Activity in mid June is almost identical to how it was in mid May and this is very consistent with the BBA's May figures.

"Although we expect activity to rise slightly in the months ahead, any major change is likely to come further down the line, triggered by an external factor such as subdued consumer spending and confidence following the VAT hike in January, an interest rate rise or the implementation of the public spending cuts later in the year. The effect of the Budget has yet to be felt."