Forex trading store

The number of mortgage approvals for house purchases in February stayed virtually flat on the low levels recorded in the previous month according to the British Bankers’ Association, as consumers remained uncertain about economic recovery.

The number of home loans approved in February hit 35,276, just 122 more than in January and well below the average 41,563 level for the past six months.

Home loan approvals dropped sharply in January because people had rushed to buy homes towards the end of last year before the end of stamp duty relief on cheaper homes.

The Government dropped the stamp duty threshold from £175,000 back to £125,000 on January 1.

The value of house purchase mortgage approvals dropped slightly in February to £4.9 billion, from £5 billion in January, and was again below the £5.9 billion six-month average.

David Dooks, statistics director for the British Bankers’ Association (BBA), said: “Consumers are focusing on building up their deposits, while any increase in borrowing appetite is unlikely without greater household confidence and economic certainty.”

The average value of house purchase approvals was £140,800, 11.5 per cent higher than a year ago but only 1 per cent more than in January.

Net mortgage lending rose in February by £2.8 billion to £760 billion, above the £2.6 billion rise in January.

Bank lending to companies dropped by £4.9 billion in February, taking total loans outstanding to £738 billion.

Net lending to consumers was unchanged, with a total £94.4 billion loans outstanding.

A rise in credit card lending was offset by a slight drop in personal overdrafts and loans. The level of deposits rose by £4.3 billion to £601 billion.

Mr Dooks said: “Larger companies have accessed capital markets recently for alternative funding and with company demand elsewhere being generally muted, weaker business lending by banks is the outcome.”

Howard Archer, chief UK and European economist for IHS Global Insight, said: “The muted BBA mortgage data reinforce our suspicion that house prices will … probably be no better than flat over the year. Indeed, we would not be surprised if house prices recorded an overall modest drop in 2010.”