Mortgage repayments have exceeded mortgage borrowing for the first time as households become more wary about the economy, according to new data.
Figures from the British Bankers’ Association (BBA) show that net mortgage lending by high street banks dropped by £73 million in May after climbing £516 million the previous month.
This is the first time net mortgage lending has been in negative territory since the association began compiling records 16 years ago.
The BBA said cautious consumers are choosing to pay down debts rather than spend money.
Statistics director David Dooks said: “The high street banks’ total lending to households stands at £850 billion. They provide around two-thirds of all new mortgage finance but because at the same time, mortgage-holders are reducing their borrowing by repaying capital, the outstanding level of debt is changing little.”
Meanwhile, homebuyer mortgage approvals fell to 30,238 in May, their lowest level in more than a year, the report shows.
The number of remortgage approvals was also lower than the previous month, down from 20,657 in April to 18,678.
Demand for borrowing from industry remained subdued in May with many firms reportedly seeking to reduce their debt levels, the BBA said.