MortgagesFeb 19 2015

Gross mortgage lending decreases last month: CML

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Gross mortgage lending decreases last month: CML

Gross mortgage lending fell 14 per cent in the month to January and is now 11 per cent down on the year, according to estimates from the Council of Mortgage Lenders.

The data shows that in January, gross mortgage lending reached £14.3bn, an 11 per cent drop on the £16.1bn lent in January last year.

Bob Pannell, CML’s chief economist, explained that the softer pace of approvals through the second half of last year contributed to the relatively weak pace of mortgage lending in January.

“Although seasonal factors will continue to weigh on activity levels for a while longer, we expect the underlying picture to pick up over the coming months, in line with stronger earnings and employment, gentle interest rate trends and recent stamp duty changes.

“As we forecast at the end of last year, gross mortgage lending remains on course to reach an expected £222bn this year.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that it was expected for January to be a quieter month due to the “flurry of activity” in ‘December as borrowers “rushed to buy ahead of the stamp duty changes”.

“Lending volumes were also subdued compared with January last year, when the housing market was in the throes of a boom. That is no bad thing as a more sustainable and measured market emerges.

“While January and February can traditionally be quiet times for the housing market, lenders are keeping busy undercutting each other on mortgage deals.

“Rates are astonishingly low, and yet lenders continue to reduce them. Lenders are busy competing for business, unsure what will happen around the general election and any uncertainty that may produce, and are keen to get off to a good start.”

Yesterday (18 February), the Office for National Statistics’ showed that UK house prices increased by 9.8 per cent in the year to December. This was more positive than CML data earlier in the week showing overall lending down 5 per cent in the final quarter of 2014, along with year-on-year falls in December.

ruth.gillbe@ft.com