Banks and building societies are lending less money despite billions of pounds of taxpayers’ money paid out to keep them in business.

The Bank of England says that mortgage lending is at an eight year low – with the amount of loans offered in April £1 billion down on March.
 
Much of the decline is due to borrowers tending to stay on their lender’s standard rate rather than remortgaging to a better mortgage rate at the end of a fixed or other special rate deal.

Many are locked out of remortgaging because the equity – the mortgage free part of their home’s value – is too high to qualify for new borrowing as lenders tighten up lending criteria.

The Bank of England’s figures are in line with those issued by the Council of Mortgage Lenders, which shows a 9% drop in mortgage advances for April.

The Bank said data from the UK’s six biggest lenders showed mortgage applications had risen over recent months with buyers returning to the market.

Mortgage acceptance rates were broadly unchanged since the start of the year, although approvals for house purchases rose during April, building on increases seen in February and March.

The survey also showed that the rate at which unsecured lending – like credit cards and loans – is growing was the lowest since 1992 during for the period January 1 – March 31.

Unsecured lending acceptance rates by lenders were little changed during April and demand remained weak.

Interest rates fell slightly during March, although during the past six months they have fallen by ‘considerably less’ than the Bank of England base rate and inter-bank lending rate Libor.

Part-nationalised banks, like Royal Bank of Scotland and Lloyds Banking Group have announced multibillion-pound loan allocations for mortgage and business customers in return for state support.

HSBC, which has not received help from taxpayers, has also pledged to boost mortgage lending this year.

Despite these promises, the money for borrowers is more of a drip than a flood and little of the cash has hit the property market – and on the figures above, is decreasing.

Finding a mortgage can still be a daunting task unless borrowers have at least a 10% deposit – and with many lenders this is still not enough to get their best rate mortgages.

For prospective borrowers looking to buy or remortgage, a mortgage comparison site like ours can reveal the current best rate mortgages in seconds.

You can also use our site to look for the cheapest loan deals and best credit card deals.