Mortgage Lending Falls 13 Percent in January
Posted on:
18
Feb
2011
by Huw Thomas
Gross mortgage lending declined to an estimated £9.2 billion in January, according to new data from the Council of Mortgage Lenders.
The drop constitutes a 13 percent fall compared to the £10.6 billion of lending in December 2010. However, the figure is a five percent rise over January 2010, which saw just £8.8 billion in gross lending.
The data shows the first year-on-year increase since August 2010, though the CML warns that comparisons with the beginning of 2010 are distorted as some households brought forward purchase activity towards the end of 2009 to take advantage of the stamp duty concession expiring at the end of the year.
“The Bank of England’s Inflation Report this week noted that the UK banks face a significant funding challenge over the next couple of years,” said CML economist Peter Charles. “In total, including funding supported by the public support schemes, around £400 billion to £500 billion of wholesale term debt is due to mature by the end of 2012. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained.
“As a greater degree of equilibrium is restored to financial markets, the availability of funding for mortgage lending should improve from current levels to support more normal levels of activity. However, the unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid 2000s is unlikely to return.”
