DOUBTS were raised about the true impact of the Bank of England’s Funding for Lending scheme on Britain’s mortgage market yesterday with new data showing depressed home loan approvals in January.
The latest findings followed figures from the British Bankers Association (BBA) showing that gross mortgage lending in January was £7.7 billion, down £700 million from the £8.4bn figure in December. It also came as BBA members yesterday also approved relinquishing the organisation’s running Libor – the London interbank offered rate at which banks lend to each other – after being stripped by the financial regulator of overseeing the benchmark following last year’s rigging scandal.
The BBA said 32,288 mortgages were approved in January, down 3.4 per cent on December and 14 per cent lower than January 2012. This is despite a tailwind thought to have been given by the Funding for Lending Scheme.
David Dooks, BBA statistics director, said: “January’s severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses.”
Dooks added that low consumer and business confidence “generates a natural tendency to restrain borrowing appetite, repay borrowing where possible and to build up cash and savings as a buffer”.
The cautious climate was highlighted by repayments of loans and overdrafts outrunning new borrowing by £134m. Capital repayment in Jamuarywas £8.2bn, up £100m from the December.
Credit card borrowing rose 5.5 per cent in January, the BBA said, “but was more than offset by a contraction of 7 per cent in personal loans and overdrafts”.
An independent new Libor-regulating body will be selected by open tender, run by Lady Sarah Hogg, to start running Libor later in 2013. Hogg chairs Britain’s Financial Reporting Council, the independent corporate governance regulator.
The BBA said members gave formal approval for the transfer to a new operator at an extraordinary general meeting.
Search for a job
Search for a car
Search for a house
Weather for Edinburgh
Friday 24 May 2013
Temperature: 3 C to 12 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 7 C to 17 C
Wind Speed: 13 mph
Wind direction: West