Mortgage lending for house purchases dropped a further 20% in May to reach a record low, according to the British Bankers Association (BBA).
The BBA’s latest figures also show re-mortgage and equity withdrawal loans have also fallen slightly, suggesting many borrowers are being forced on to standard variable rates (SVRs).
In addition, loans made for house purchases fell to just 27,968 in May, down from 34,752 the previous month, and have fallen by 56.1% since May 2007.
The value of purchase loans also fell 20% - from £5.4bn to £4.3bn - adding to a slump now totaling over 50% in the past twelve months.
Remortgaging activity has been more robust than house purchase lending, but has nonetheless fallen due to the ongoing effects of the credit crunch.
The number of loans for remortgages fell by 8.2% in May to 63,303, with numbers down 10% year-on-year.
David Dooks, statistics director at the BBA, says: “Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households. Only remortgaging business is holding up, where people need or want to take advantage of deals with other lenders."
Credit card lending figures show Britons are continuing to use their cards to cope with rising costs, and new spending in May rose to £7.5bn, up 2.8% from April and up 4.8% since May 2007.
The figures may confirm that May’s surprise spending spree, which saw retail sales rise 3.5%, may have been due to heavy credit card use as consumers struggled to cope with escalating fuel and food prices.
The BBA also noted slower growth in consumer desposits, rising just £1.3bn in May compared with £6.2bn in April, which may reflect falling disposable incomes for households.
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