Mortgage lending falls as buyers leave market

Published 12th Mar 2010

Homebuyers abandoned the housing market in January after the end of the holiday on stamp duty.

The Council of Mortgage Lenders said that the number of all home loans issued in January had fallen by 49 per cent to 32,000 mortgages. The total was, it said, an emphatic demonstration of the temporary lift that the stamp duty break had given the housing market.

The CML said that lending was expected to remain weak over the next few months.

The number of loans to first-time buyers fell even more steeply, by 54 per cent to 11,300.

Demand for properties that had benefited from the stamp duty holiday, priced between £125,000 and £175,000, tumbled with the number of first-time buyer mortgages, falling by 80 per cent.

Michael Coogan, director-general of the CML, said: “It was a quiet start to the year. Lending volumes in January were low, but we had predicted this would happen due to the end of the stamp duty holiday distorting December’s figures.

"We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”

The value of mortgages fell by 45 per cent to £4.7 billion between December and January, while remortgage loans declined by 12 per cent to £3 billion.

However, brokers said that there was some evidence that lenders had begun to offer better deals.

Brian Murphy, head of lending for the Mortgage Advice Bureau, said: "The mortgage market as a whole is trending upwards. There are more products, more products at higher loan to values and more competition on rate among the main players.

"February, for example, was our busiest month for nearly two years. Despite this, it will, of course, remain difficult for anyone who doesn't satisfy the requisite borrowing criteria to obtain a loan."

Source: ' Times '

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