The number of mortgages approved in January was down 14% from the same month last year, with only 32,288 granted in the first month of the year.
Overall net borrowing was also down £0.4 billion from December to £7.7 billion proving it wasn’t just the housing market being impacted by the weather and low confidence.
BBA Director, David Dooks, said
“January’s severe weather impacted adversely on what was already a subdued picture of borrowing demand from households and businesses,
“While general economic growth stalls, 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 housing market has been getting stronger month-on-month since the introduction of the Funding for Lending Scheme by the government.
The BBC spoke to Mark Harris, chief executive of SPF Private Clients who said,
“As with the Council of Mortgage Lenders’ lending figures for January, the BBA figures show a more subdued market which might be blamed on the bad weather,”
“We would have expected stronger figures because of the excellent mortgage rates now available as a result of the FLS; it goes to show that we remain some way off a sustained recovery in the housing market as caution continues to prevail.”
While people may be borrowing less they are not saving any more than before according to figures released on Monday from Scottish Widows.
The pensions and investment company said they found only 31% of people asked said they were saving any money compared to 32% from last year.
This would suggest that people are using every penny they have just to live while others may be paying off older debts instead of taking on new ones.
However with that said the report from the British Bankers Association contradicts Scottish Widows report showing personal deposits and savings rose £3.8 billion.
Saving, paying off debt and keeping to a tight budget might be the plan people have in place for 2013 and it’s probably not the worst idea.