FinSu IVA

The UK mortgage market remains subdued despite a slight recovery in April, the major banks say. The British Bankers' Association (BBA) figures show 38,704 new mortgages were approved for house purchases in the UK in April, up from 35,546 in March.

But this is still down 39.4% compared with the same time a year ago. The figures show a sharp rise in the number of people remortgaging, highlighting a trend of homeowners switching lenders for a better deal.

"It is clear that, contrary to some reports, the mainstream mortgage market has not ground to a halt," said the BBA's statistics director David Dooks.

The figures only cover the major banks, who have been able to ride the credit squeeze and have continued to offer a wider range of mortgage deals than smaller lenders.

The smaller banks and building societies have been putting deals on hold or withdrawn offers as lending between financial institutions remains tight.

The rise in remortgaging levels - up from 60,410 in March to 74,722 in April - could also be the effect of Northern Rock customers being encouraged to switch lenders for more competitive deals.

The BBA said that approvals for remortgaging were "exceptionally strong" in April and would lead to the main High Street banks increasing their share of the mortgage market.

But approvals for house purchases continued to be well down on 2007. Mr Dooks said pressures on household finances, stalling house prices and tighter lending criteria were all cutting the demand of people wanting to move home.

Annual growth in credit card borrowing also fell slightly in April, with repayments (£7.7bn) outstripping new spending on plastic (£7.4bn).

The figures came on the day that a report by ratings agency Standard and Poor's (S&P) suggested that more than a fifth of sub-prime borrowers in the UK had fallen behind with repayments.

The number of people with chequered credit histories who fell behind on repayments for more than 30 days rose from 19.4% in the final three months of 2007 to 21.7% in the first quarter of 2008.

Some 10.6% of sub-prime borrowers were 90 days or more behind on repayments, the report found.

S&P found the proportion of homeowners with good credit ratings - so-called "prime" borrowers - who were more than 30 days in arrears rose to 2.4% in the first quarter of 2008, up from 2.1% in the previous three months.