Gross mortgage lending down 18 percent in December - CML

Published 21st Jan 2011

Gross mortgage lending fell by 18 percent on the year to 11 billion pounds in December, the lowest figure for a month of December since 2000, the Council of Mortgage Lenders said on Friday.

However, the CML said the comparison with the previous year's figure may have been distorted by buyers bringing forward house purchases to take advantage of a tax concession that ended in December 2009.

The decline in December 2010 represented a 6 percent drop from 11.7 billion pounds in November. For 2010 as a whole, lending totalled 136.3 billion pounds, slightly above the CML's annual forecast of 135 billion pounds.

CML economist Peter Charles said mounting expectations that interest rates could rise sooner than previously thought may make home loans more expensive and erode demand.

"Against this backdrop, consumer demand may be weaker than we would otherwise have expected," he said in a statement. "Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payments for most mortgage holders."

Record low interest rates and poor supply helped UK house prices to stage a dramatic recovery in the second half of 2009, but prices began to weaken again in the second half of 2010.

Tighter lending conditions, weak earnings growth and uncertainty about the economic outlook have dampened demand in recent months, economists say.

Source: ' Reuters '

View All Latest News