Mortgage lending plummets in January

Gross mortgage lending plummeted in January, adversely affected by the end of the stamp duty holiday.

The Council of Mortgage Lenders (CML) puts the gross figure at £9.1 billion, down 32% from £13.4 billion in December and 21% year-on-year.

While a decline is typically experienced between December and January, advances were at their lowest since February 2000 (£7.9 billion), December having received a house purchase boost from those keen to avoid paying stamp duty on homes worth up to £175,000.

While acknowledging that the market improved over the second half of last year, CML economist Paul Samter observes: “We remain in a period of uncertainty for the housing market and economy at large.”

According to Mr Samter, more recent developments have been influenced by the end of the stamp duty holiday but are “likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year”.

However, he adds: “The Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession.”

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