Mortgage lending skips seasonal dip
Lenders approved an estimated £13.7 billion in home loans during December, the Council of Mortgage Lenders (CML) has reported.
Gross lending showed a 14% rise on November and the figure was also 3% up on December 2008.
Furthermore, the rise put the annual comparison in positive territory for the first time since October 2007; however, gross lending was still at its lowest since December 2001, putting aside a surge in December of 2008.
Turning to the final quarter of 2009, gross lending totalled £39.1 billion, up slightly from £39 billion in the previous three months but down by 14% year-on-year.
However, the CML points out there is usually a fall of around 6% between the third and fourth quarters each year.
Finally, for 2009 as a whole, lending totalled £143.7 billion, slightly above the Council’s annual forecast of £141 billion, but down 43% on 2008 and at its lowest since 2000.
CML economist, Paul Samter, observes: “The December figure is surprisingly strong as there is typically a small decline in the month.”
He adds: “Evidence suggests that the rise was driven by a surge in house purchase completions … the most likely explanation is that buyers of cheaper property wanted to complete their transactions before the end of the year to beat the end of the stamp duty holiday.”
From this point of view, Mr Samter warns that mortgage lending may see a larger than usual seasonal drop-off in the early part of 2010, but looking further ahead he predicts: “With a gradual pick up in economic growth and wider access to credit, 2010 will almost certainly be a better year in the mortgage market than 2009.”
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