Bank of England figures show that the number of contractor mortgages approved in May remained virtually the same as in the previous month at 49,815.
Analysts were disappointed as they had hoped to see a recovery in new mortgage lending after the decline that followed the end of the stamp duty holiday.
Mortgage lending is currently at its lowest level for ten years despite the low mortgage interest rates and economists are predicting that house prices will drop again once the new VAT rate comes into force in January 2011.
There was a fall in the number of people taking out a remortgage in May, with property owners reverting to lenders’ standard variable rate products when their fixed rate deals came to an end.
Meanwhile, the UK’s largest mortgage lending group, Lloyds, has announced that it is axing 1,800 jobs after divisional mergers following the HBOS Plc takeover.
650 full-time jobs are expected to go after contractors, agency workers, relocations and redeployments have been taken into account.
Lloyds’ employees at Nottingham and Chester now have to face another summer worrying about their job security, Cath Speight, from Unite said. However, some roles will be relocated to Speke and Warrington. Since taking over HBOS at the beginning of 2009, Lloyds has announced over 17,700 job cuts.
As a result of the takeover, the bank intends to reduce expenditure by 2 billion pounds a year for the next 2 years.
In November, the bank will also close 265 of the Halifax independent agencies, which provide business bank account services.
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