Mortgage lending continues to slide

February saw further signs of a slowdown in the mortgage market, with reductions in lending to new buyers and the number of loans approved overall, according to figures released by the Bank of England today.

The value of all the loans approved over the month of February fell slightly from ?21.18bn in January to ?20.66bn. The number of loans approved was also down at 109,000 from an average of 113,000 over the past three months, although the Bank pointed out that if allowance was made for the fact that there are fewer working days in February, the figure would have remained unchanged from January's.

Today's figures do not come as a surprise for the industry; rather, they echo what has already been seen. The Council of Mortgage Lenders' (CML) figures, released earlier this month, reflected the same trend, showing a fall in mortgage lending to ?17.8bn from ?19.4bn during February, while the British Bankers' Association said net lending by its members was also down, to ?4.96bn from ?5.29bn.

Simon Rubinsohn, chief economist at Gerrard, was unperturbed by today's results. "Mortgage lending has come back a bit, but that isn't a total surprise," he said. He went on to put the figures in context, pointing out that "This is still the fourth largest monthly figure on record, and people are still looking to withdraw equity (from their homes)." Indeed, the CML's most recent figures on remortgaging showed the market hitting a new record, reflecting consumers' growing enthusiasm for borrowing against their property.

Elsewhere, unsecured lending (loans, overdrafts and credit cards) rose slightly to ?16.52bn from ?16.42bn in January. Credit card lending remained static. After repayments were taken into account, outstanding debt on plastic rose by just ?515m, the weakest figure since October. Consumers now owe a total of ?47.72bn on credit cards.

Commenting on the figures, Yolande Blackburn, head of consumer finance at Barclays, said: "The fall in total consumer borrowing correlates with the decline in consumer confidence we have been seeing since the start of this year.

"We believe that consumer confidence has also been impacted by fears during January and February of an impending war with Iraq, driving confidence to its lowest levels for some time. We would expect to see a further decline in borrowing reported in the March figures."