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Housing market remains muted

The UK housing market remained subdued during February following the end of the Government's stamp duty holiday, figures showed yesterday.

The number of mortgages approved for house purchase crept up to 35,276 during the month, following January's 23% slide, the British Bankers' Association said.

But they remained well down on the levels seen during the second half of 2009, as well as December's 28-month high of 45,690.

Commentators had warned the market was likely to be subdued during the early part of 2010, as people buying lower value properties had pushed through purchases before the stamp duty threshold fell back to £125,000 from £175,000 at the beginning of this year.

Mortgage lending by the major banks also remained depressed during February, which had been anticipated following the steep fall in approvals during the previous month.

Net mortgage lending, which strips out redemptions and repayments, totalled £2.8bn during the month, up from January's £2.6bn, but down on the recent six-month average of £3bn.

BBA statistics director David Dooks said: “High street banks continue to provide the majority of all new lending for mortgages, though the volume of approvals remains subdued after the year-end stamp duty change.”

There was also a slight pick-up in the number of mortgages approved for people remortgaging and those releasing equity from their home or taking out a buy-to-let mortgage during the month.

Consumers continued to focus on paying down their debt rather than taking on new borrowing, with net consumer credit remaining broadly unchanged during the month once repayments were taken into account.

Within the total, borrowing through credit cards rose by £241m, in line with the recent trend, while lending through loans and overdrafts contracted for the 15th month in a row, with consumers repaying £257m more than they borrowed.

At the same time, people increased their savings levels by £4.3bn, the highest level for more than a year and well up on both January's figure of £2.6bn and the recent six-month average.