Mortgage lending stronger in December

| January 26, 2010

Mortgage lending by Britain’s High Street banks strengthened slightly in December, although the end of the stamp duty holiday is likely to have prompted a surge in completions before the New Year.

The British Bankers’ Association (BBA) reported net lending of £3.5 billion during the month, up from £3.4 billion in November and showing an annual rise of 4.6%.

December approvals for house purchases rose slightly on a month earlier to 45,897 and remortgage volumes also edged up, to 23,480.

In terms of annual change, the figures represent a 102% increase and a 20% decrease respectively.

Overall approvals in 2009 stood at 980,000, some 27% lower than in 2008 and at their lowest level since BBA records began in September 1997.

However, the Association points out approvals for house purchases are in recovery and that the sharp decline in remortgaging reflects borrowers moving to lower standard variable rates when fixed deals expire, having little incentive to look for other lenders while rates are stable.

Commenting on the figures, BBA statistics director, David Dooks, says: “The High Street banks continued to lend substantial amounts in the weaker mortgage market of 2009 approving more than 440,000 loans for house purchase.”

He adds: “Their share of gross lending went up from an historical level of about two-thirds to three-quarters, due to specialist lenders largely withdrawing from the market and building society finance contracting.”

Last week, the Council of Mortgage Lenders reported that mortgage lending as a whole totalled £143.7 billion in 2009.

The total is slightly above the Council’s annual forecast of £141 billion, but down 43% on 2008 and at its lowest since 2000.

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