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Gross mortgage lending hits 10-year low

Article by Paymex 18th Feb 2010 00:00

New figures from the Council of Mortgage Lenders (CML) show that mortgage lending dropped 32% in January to its lowest monthly total since February 2000

Experts say the drop is because of a housing market lull following a huge boost in house purchase activity in December as borrowers rushed to take advantage of the Government’s stamp duty holiday and avoid paying tax.Gross mortgage lending reached an estimated £9.1bn last month, a drop from December’s figure of £13.4bn and a 21% fall from the January 2009 figure of £11.5bn.

January’s total was the lowest monthly total since February 2000 when mortgage lending measured £7.9bn.
It was also the lowest January total since January 2000 when gross lending measured £7.4bn.

"More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year. However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession," he added.

Brian Murphy, head of lending at broker Mortgage Advice Bureau, warned people not to take too much heed of January’s data.He explained: "The drop is a result of both seasonal factors and December’s stamp duty holiday rush. Overall, the market is in a far better state with mortgage availability at a twelve-month high.

"This time last year the mortgage market was in a coma, but in the past three to four months a lot more products have become available, as lenders once again start fighting for market share," he added.