Annual growth of net mortgage lending now 2.3%

Weak trading activity is discouraging businesses from borrowing to expand and most are oriented towards repaying debt and reducing their operating costs; larger corporates are also using the capital markets less.

"Householders also remain focused on paying down debt, leading to a net contraction of unsecured borrowing and low net mortgage lending, although new mortgage lending is holding up fairly well”.

Gross mortgage lending of £7.7billion in March was slightly lower than the recent six month average of £7.9billion and 11%
lower than gross lending in March 2010.

Despite gross mortgage lending holding up fairly well recently, this is due to stronger remortgage activity rather than new house purchases. However, net mortgage lending increased by only £0.8billion in March, due in part to higher repayments.

House purchase approvals were slightly higher than in February but 10% lower than in March 2010. The average value (£145,400) was 0.5% lower than a year earlier.

Numbers of remortgage approvals in March were 7% lower than the previous month but 1% higher than in March 2010.

Approvals for equity withdrawal continue to be weak and were 19% lower than March 2010.

Demand for unsecured borrowing remains subdued, despite stronger reported retail sale volumes in March, suggesting that cash, not credit, is being used for spending.

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