The decrease in lending was attributed by some housing industry figures to economic uncertainty around Brexit, as the 29 March deadline for Britain’s exit from the European Union approaches.
The report did, however, show the number of mortgages approved by the main high street banks in January at 0.3 per cent higher than 12 months ago and approvals for home purchase 1.5 per cent up on the same period.
Remortgage approvals were 3.1 per cent lower and approvals for other secured borrowing were 6.8 per cent higher.
This follows several months of strong growth in remortgaging in 2018, as customers took advantage of a competitive mortgage market to lock into attractive deals.
Reacting to the figures, Jeff Knight, marketing director for Foundation Home Loans, said: “As we edge towards March 29, some buyers have pulled the brakes on the purchase process – although given continued interest from first-time buyers, it’s not quite been enough to halt activity entirely.
“In fact, specialist cases have increased their share of the market, with lenders able to develop more bespoke offerings that are better suited to this climate.
“Those who are a little more concerned about moving in the short-term might opt to re-mortgage, locking in low rates to help manage the chances of an interest rate rise later this year.”
Richard Pike, Phoebus Software sales and marketing director, said: “Overall lending in January was around one per cent down on the same month last year but more starkly it was about nine per cent below the previous six-month average.
“Unfortunately, there is nothing going on in Westminster or in Europe that is helping to alleviate the situation, and neither will it for some time.
“There are still people who want and need to buy, and nothing in the political arena will change that. The next few months will be telling, we could be looking at an even less rosy picture in a couple of months’ time, or we could see that despite uncertainty people carried on buying.”
Personal borrowing up
January saw £10.8bn of credit card spending – 4.4 per cent more than the same month the previous year. The outstanding level of credit card borrowing also grew by 4.4 per cent in the 12 months to January. Personal borrowing through loans and overdrafts grew by 4.7 per cent across the year.
Personal deposits in total grew by 0.4 per cent in the year to January 2019 and UK Finance said this indicated that the recent rise in real wages was yet to translate into higher levels of saving.
Deposits held in instant access accounts were 2.4 per cent higher than last December, reflecting the preference among consumers to keep cash close to hand amid the ongoing economic uncertainty.