BoE: Mortgage lending fell in April

Some major UK lenders also reported downward pressure on mortgage pricing, due to increasing competition to lend.

Despite the increased numbers of products at LTV ratios between 75% and 89%, the proportion of loans actually advanced at these high ratios is the same as Spring 2009.

However, according to the BoE, mortgage prices are at their lowest since records began in 1995, with the exception of two-year fixed rates for 90% LTV products, which remain relatively inflated.

Paul Hunt, managing director of Phoebus, said: “Competition is heating up, and with the appearance of Aldermore and Precise Mortgages – and the reappearance of Link Loans – there will soon be even more options for borrowers and brokers. That’s excellent news for the market.

He added: “The Bank’s figures also show the amount saved in building societies outweighing the amount withdrawn, for only the second month in the past year. The mutual sector needs this extra inflow of cash if it’s to survive this prolonged period of ultra-low interest rates.”

Howard Archer, senior economist with IHS Global Insight said, however, that the housing market was still finding it difficult to regain momentum after flagging at the start of 2010.

“Still muted mortgage approvals in April reinforce our suspicion that house prices will struggle to make significant gains over the coming months,” he said.

Concerns continue to grow that the Bank of England will have to raise interest rates before the end of the year, because of higher than expected inflation, said Archer.