Gross lending was down 16.1% on the same period a year ago, while net lending increased by £1.7bn in October compared to a rise of £3bn in the same month of 2009.
Nevertheless, the high street banks’ annual growth in net mortgage lending was 3.5% in October compared to just 0.8% for the whole of the mortgage market in September.
House purchase approvals were marginally lower in October at 30,766, reflecting the weak activity in the mortgage market, with the average value of house purchase approvals 2% up on a year ago at £144,900.
Meanwhile, the number of remortgaging approvals was stronger than the recent six-month average of 22,573 at 24,112, while equity withdrawal remained weak.
David Dooks, statistics director at the BBA, said: “Activity in the mortgage and consumer credit markets continued to be subdued in October, reflecting uncertain prospects for households and lower consumer confidence.
“Credit availability for viable businesses has improved, so a continued contraction in net lending growth reflects repayment behaviour, particularly by larger companies.”
Richard Sexton, business development director at e.surv, said “Beneath the surface there is a real two-speed market in operation. Approvals are actually up for the most expensive properties. Wealthy buyers are using large deposits to side-step lending restrictions and they are more likely to be in parts of the country, like prime London, which have been more insulated from wider market weakness.
“The flip side is that approvals for cheaper properties have fallen dramatically. It’s hard to foresee a significant improvement in mortgage lending, however, while banks are focused on the withdrawal of the Special Liquidity Scheme, the end of credit guarantees and the arrival of Basel III. Add sovereign defaults into the mix and lenders are likely to be pretty risk averse for a while, leaving hopeful mortgage borrowers out in the cold.”
