The number of new mortgages approved by the main high street lenders nudged upwards in January, data published on Tuesday showed.
UK Finance, the trade body for the big banks and building societies, said that approvals for home purchase rose 1.5% year-on-year in January, while re-mortgage approvals were 3.1% lower, giving an overall rise of 0.3%.
The drop in re-mortgaging follows several months of strong growth as customers looked to lock in deals, with some doubt over what the Bank of England’s plan will be for rates amid the extra uncertainty of Brexit.
Gross mortgage lending was 1.5% lower, at £21.6bn.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “January’s data indicate that mortgage lending is holding up much better than surveys of house buyer demand have suggested.
“We’re reluctant to conclude, however, that housing market activity is on a sustainable recovery path. The new buyer enquiries balance of the RICS Residential Market Survey fell to its lowest level since June 2008 in January; the balance usually is a great guide to the lending data. The sharp downturn in lending in 2016 also demonstrates that Brexit uncertainty can be very damaging.
“Even a sluggish pace of rate hikes, following the resolution of Brexit uncertainty, will prevent mortgage approvals from recovering to pre-referendum norms over the next couple of years.”
UK Finance said that £10.8bn was spent on credit cards in January, a 4.4% hike on the same month a year earlier, with the outstanding level of credit card borrowing also growing by 4.4% in the 12 months to January. Personal borrowing through loans and overdrafts was ahead 4.7%.
Personal deposits grew by 0.4% in the year to January, which UK Finance said “suggests that the recent rise in real wages has not yet translated into higher levels of savings”.