The housing market got off to a slow start in 2011 according to new figures from the Council of
Mortgage Lenders (CML). Just 28,500 home loans were approved during January, a fall of 29 per
cent on December’s numbers and the lowest level since February 2009.

Government spending cuts and rising household bills have been blamed for the fall.

Housing market activity falls in the New Year

The CML figures acknowledged that lending does typically fall between December and January but
admitted the fall was larger than the seasonal average. December’s harsh weather was also cited as
a factor, as was the prospect of imminent interest rises to control spiralling inflation.

The Daily Telegraph reported that ‘mortgages approved were 12 per cent lower than in January last
year, which the CML said was a ‘substantial’ year-on-year fall, provided that the housing market was
very subdued in January 2010 following the buyers’ the stamp duty holiday finished at the end of
December.’

The CML – the group made up from UK lenders – said that the combination of factors that
contributed to January’s sharp fall indicates that the market will remain subdued for the foreseeable
future.

Michael Coogan, director general of the CML, said that uncertainty over interest rate rises and
the bad winter weather will have exacerbated the fall in lending in January. He concluded that it
would be premature to draw any firm conclusions about activity levels over the next few months
from January’s unexpectedly low figures as the property market remains stable at low levels of
transactions.

In addition to the low levels of mortgage approvals, the CML also reported a sharp drop in the
number of first time buyers entering the property market. Just 10,500 people bought their first
home in January 2011, a fall of 28 per cent on December’s figures and the lowest level since
February 2009.

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