The British Bankers’ Association has revealed figures showing that mortgage lending dropped in November.
Unsecured loans have reduced in number as borrowers become more cautious with their finances.
The number of mortgage approvals issued by UK banks fell to its lowest level in almost two years this November, according to statistics revealed by the British Bankers’ Association (BBA).
Approvals dropped to a 20-month low with 29,991 home loans agreed upon in November.
First time buyers have found it hard to secure the finance they need from banks due to their stringent lending policy, which may explain the low figures – many major UK banks are opting to lend to ‘safe’ borrowers who can provide large initial deposits instead of those with low cash flows and little in the way of saved capital.
The statistics also revealed that net lending by the major banks stood at £1.46 billion in November, which was half the 2010 figure for the same period and the lowest amount since August 1999.
However, remortgaging increased, reaching 27,045 in November, which is almost 4,000 higher than the average of the levels seen in the previous six months. BBA statistics director David Dooks said: “Remortgaging was strong in November as borrowers chose to replace maturing fixed-term mortgages”.
The figures also showed that repayment levels surpassed new borrowing figures by £172 million on all unsecured debt in November last year.
Mr Dooks said: “Demand for unsecured lending has been weak some time now. This is symptomatic of people being very cautious about household finances and working within their budget”.
He added: “Credit cards are merely being used as a form of payment. People are not wanting to extend themselves and take on more borrowing than they can afford”.