New figures from the Bank of England show that mortgage lending plummeted in March as the housing market remained subdued.  The Independent reports that net lending (taking into account repayments and redemptions) was just £374 million in March, 60 per cent lower than February’s figure of £950 million.

Slight increase in mortgage lending approvals

Despite the fall in net lending to December 2010 levels, there was a slight increase in the number of mortgages approved for house purchase in March.  Approvals rose to 47,557, the highest level since November 2010.

However, the figure is still lower than a year ago and substantially below the 70,000 to 80,000 a month that economists consider to be consistent with a stable housing market.

Samuel Tombs, UK economist at Capital Economics, said: “March’s UK household borrowing figures suggest that activity in the housing market remains at a very low level.

“While the Bank of England’s measure of mortgage approvals for new house purchase rose from 46,700 to 47,600 in March, that rise only took approvals back to the level seen in November.

“What’s more, even though activity has picked up a bit, house prices are still broadly stagnant.”

House prices fall for third time in six months

The Bank of England figures come as Nationwide Building Society said house prices fell by 0.2 per cent during April, leaving property values 1.3 per cent lower than they were a year ago.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “The renewed fall in house prices reported by the Nationwide in April is consistent with our view that house prices will trend down gradually overall through the rest of 2011 and, very possibly, the early months of 2012 as tighter fiscal policy and the likelihood of gradually rising interest rates before the end of 2011 pressurise the housing market.”