January saw mortgage lending figures for new house purchases down 29 per cent from the previous
month, according to new figures from the Council of Mortgage Lenders (CML).
The first month of 2011 saw only 28,500 mortgages advanced for property purchase – the lowest
figure since February 2009. Although seasonal factors usually contribute to a lending drop between
December and January, the CML commented that the size of the drop was beyond what would
normally be expected from seasonal factors alone.
Harsh winter weather has taken its toll on the housing market, and the threat of rising interest rates
has made many potential home buyers more cautious. Other factors are likely to have included the
pressure of government spending cuts, the increase in VAT and surging inflation – all of which add
up to tough times for those looking to buy a new property.
Compared to January 2010, the figure represented a 12 per cent drop, which the CML described as
a “substantial” year-on-year fall.
The CML’s director general, Michael Coogan, said: “Pressures on household budgets have been
increasing both in terms of take-home pay, and indirect tax measures such as the VAT increase and
recent inflationary pressures, so we were expecting a fall in transactions early in the year, and a flat
mortgage market underpins our forecasts for 2011.”
