Banco Santander Share News (BNC)

The British Bankers Association (BBA), whose members dole out almost two-thirds of mortgages to British home buyers, said mortgage approvals for new homes fell more sharply than expected in February.BBA members approved 33,103 applications for mortgages on new dwellings in February, down sharply from 37,977 in January, and well below the 37,250 the market had been expecting. All figures are seasonally adjusted unless otherwise stated."In February house purchase approvals dropped back to more normal trend levels as demand from buy-to-let investors and first-time buyers, seeking to buy before the stamp duty exemption ends in March, fell back," the BBA'statistics director, David Dooks, said.The number of re-mortgaging approvals was at its lowest level for 13 years at 18,147, down from 20,635 in January and almost 5,000 below the average level of 22,976 in the six months prior to February.The amount of money lent out dipped to £7.9bn from £8.1bn the month before but was mostly offset by mortgage repayments, which eased to £7.8bn from £7.9bn in January.The BBA could not resist crowing about the growing market share of its members, however. "Annual growth of 1.2% in the banks' net mortgage lending continues to outstrip annual growth of 0.8% across the whole lending market recently," Dooks said.Prices are still recovering, with the average house purchase mortgage of £146,600 being 5% higher than in February 2011. However, Dooks said, "Businesses and households continue to be cautious about their finances in the face of difficult economic times and this shows up in a reluctance to take on new credit, or where possible, seeking to pay back bank borrowing.""Confidence will be helped in the coming months by official schemes to support the mortgage market and stimulate business demand for credit," Dooks believes.Britons seem to be slowly weaning themselves off reliance on their "flexible friend", the credit card. Paying with plastic declined to £7.0bn in February from £7.1bn in January, and once again credit card repayments, at £7.3bn (down from £7.4bn in January) outstripped outgoings."Demand from consumers for loans and overdrafts remained weak and repayment of this unsecured borrowing continues to outweigh new lending. This behaviour has resulted in a constant contraction of borrowing levels over the past three years," Dooks noted.As for lending to businesses, a key concern of the government, this remained subdued. Dooks says this is because of subdued demand "as economic confidence impacts [sic] on business growth and borrowing attitudes," but a recent report from the Bank of England claimed some banks are refusing to lend to small and medium enterprises, while others are bumping up fees for refinancing existing loans.The government introduced the National Loan Guarantee Scheme (NLGS) this week to try to address this. Some of the banks participating in the NLGS scheme, notably Barclays and Santander, have indicated they have no interest in loans of less than £25,000 to small businesses, because the administration costs make such loans economically unviable, even in an era when the British tax-payer is making cheap money available to banks on a large scale unprecedented in modern history.State-owned Royal Bank of Scotland was at pains to point out "businesses can borrow as little as £1,000 from us" and that it is the only major bank with a lending limit as low as that.Net lending by BBA members to non-financial businesses was negative in February, at -£0.7bn, though this represented an improvement on January's net lending figure of -£2.8bn. In the six months prior to February, net lending to non-financial businesses averaged at -£1.0bn.jh