Widespread predictions that the housing market would slow in the final months of last year appear to have been borne out, as new data published today (17 February) show overall lending down 5 per cent in the final quarter of 2014 and year on year falls in December.
Research by the Council of Mortgage Lenders found the number of loans issued decreased for all categories over the closing three months compared to the preceding quarter, with first-time buyers faring considerably better with a drop of just 2 per cent against an overall 5 per cent slide.
On a quarterly basis the aggregated value of loans advanced declined more sharply, although on a year-on-year basis this trend was reversed. This suggests the average value of loans peaked in the Autumn before falling back again.
In total 173,200 loans were advanced in the final three months of 2014, down 3 per cent down compared to the fourth quarter of 2013. At £51.1bn gross lending was down 8 per cent on the third quarter, but a more modest 1 per cent on 2013.
Across the quarter, there were 80,1000 loans worth £11.6bn advanced to first-time buyers, down 2 per cent and 5 per cent respectively on the third quarter, but unchanged compared to the fourth quarter of 2013.
In December there was a recovery across the board compared to what appears to have been a November slump, though the number of loans issued fell for all categories compared to December 2013 and only for first-time buyers did the value of lending not register a decline.
Buy-to-let loans totalled 17,300 in December, unchanged from November but up 18 per cent compared to December 2013. The total value of these loans at £2.5bn was up 4 per cent month on month and up 32 per cent compared to December 2013.
Overall the estimate for gross lending in 2014 is £204.4bn, up 14 per cent on 2013.
Paul Smee, director general of the CML, said that improving economic conditions, boosted by government schemes like Help-to-Buy, saw the highest amount of first-time buyers purchase their first home for seven years.
He said: “The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and we’d expect this steadying of the market to continue in 2015.
“In 2014, the mortgage market saw unprecedented change with the introduction of major regulatory reform but the market has adjusted and kept its stability throughout.
“There will be challenges in 2015, including preparation work on the European Directive implementation and a General Election potentially bringing new housing policies to be put in place. But the industry is stronger than a year ago and ready to meet the challenges going forward.”