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Mortgage lending hit 8 year low in April

28 May 2009 / by Rachael Stiles
Total mortgage lending amongst high street banks fell to an eight year low in April, according to the latest statistics from the British Bankers' Association (BBA).

April saw net mortgage lending of £2.7billion, compared to £3.4billion in March – which was also the average over the past six months – marking the lowest recorded amount since March 2001, the BBA's figures show.

While lending has been softened by the fall in house prices, with the average loan amounting to £129,000, down from £155,100 last year, the number of loans remained relatively strong, which some analysts have interpreted as a sign of stability returning to the housing market.

There were 27,685 new loans for home purchase in April, up from 26,671 in March, and higher than the six month average of 23,812.

Commenting on the data, BBA statistics director, David Dooks, said: "The house purchase part of the mortgage market appears to have stabilised, with slightly more approvals coming through, although April’s weak net mortgage lending reflects the lower number of approvals in previous months."

The figures from the BBA reflect those from the wider market, as recorded by the Council of Mortgage Lenders, which found that mortgage lending in April fell nine per cent compared to March, representing a 60 per cent fall on April 2008's lending.

While the number of home loans in April gave some cause for hope of green shoots in the mortgage market, and some lenders are bringing more competition back to the arena with lower rates and higher loan to values, Mr Dooks believes the difficulties in the market are set to continue for the time being.

"Households’ uncertain financial circumstances not surprisingly continue to dictate consumer behaviour," he said, "both in the housing market and in generating only low demand for new personal loans."

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