Mortgage lending plummeted again in January – by 13% from December to a miserly £9.2
billion, according to the Council of Mortgage Lenders (CML).
The lending figure is £1.4 billion down on December’s £10.6 billion but 5% higher than the
£8.8 billion advanced in January 2010.
The CML says this is the first year-on-year increase since August 2010, but explains the
figures for January are distorted because more purchases were recorded in January 2010 as
home buyers looked to beat the stamp duty discount deadline.
CML economist Peter Charles said: “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: 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.
Mortgage approvals for buying a home down by 5,000
“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.”
The number of loan approvals for house purchase (42,563) fell in December, according
to the latest Bank of England figures, and was lower than the previous six-month
average (47,433).
Remortgage approvals (30,595) also fell in December but were still higher than the
previous six-month average (29,362).
Overall, secured lending against homes fell by £0.3 billion, which suggests many home
owners paid extra to lenders.
