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• Number of mortgages approved for purchases fell 7% in March
• Figure is 25% lower than the same month last year
The number of mortgages approved for house purchases by banks fell by 7% in March, figures showed today, suggesting talk of a recovery in the housing market may be premature.
The British Bankers' Association (BBA) said its members had approved 26,097 loans for house purchases over the month, down from 28,024 in February.
The figure is above the average of the previous six months, which stands at 23,152, but is 25% lower than March last year.
The drop follows three months of rising approvals and could be a sign that the recovery in the housing market is not yet in full swing, despite estate agents and surveyors reporting increased interest from would-be buyers.
The number of remortgages agreed by banks also fell from 28,237 to 26,831, as borrowers continued to opt to stay on their lenders' standard variable rate (SVR) mortgages rather than switch to a new deal.
Recent interest rate cuts have meant that many lenders' SVRs are now lower than the deals they are offering new customers, particularly those who have seen the equity in their property fall below 25%.
All measures of banks' mortgage lending were lower in March than in February, with the gross value of home loans advanced during the month dropping from £9.2bn to £8.9bn, and the net value of those loans, which takes into account repayments and redemptions, falling from £3.9bn to £3.7bn.
Gross mortgage lending for the month was 47.2% lower than in March last year, while the value of loans approved was 54.8% lower than 12 months ago at £7.3bn.
The BBA's statistics director, David Dooks, said: "Lending to households continues to grow as banks make funds available for people who meet their lending criteria, but consumer confidence is fragile and unlikely to change demand markedly in the near-term.
"The banks' figures also show it would be unrealistic to expect the mortgage market to recover in a steady and consistent way in the current economic environment."
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