Mortgage lending 12% lower in January

| February 20, 2012 | 0 Comments
Mortgage lending 12% lower in January

Gross mortgage lending fell to £10.5bn in January, 12 per cent lower than the total for December.

However the figures represent a year-on-year increase of 10 per cent, the Council of Mortgage Lenders (CML) said.

January was the sixth consecutive month of higher lending compared with the previous year.

Home loan approvals also increased in January, by 30 per compared with January 2011, to the highest level for two years.

“The recent improvement in housing and mortgage market sentiment is welcome,” the CML’s chief economist Bob Pannell said.

“But we should be careful not to overstate its significance, given the very low levels of activity we are starting from and the protracted and difficult economic rebalancing that the UK and other countries have embarked upon.”

Some of January’s upturn was attributed to a rush by first-time buyers to purchase a property before the end of stamp duty relief in March.

The temporary exemption, which meant that homes costing under £250,000 were free from the 1 per cent stamp duty, is being lifted by the government because it is believed to have been ineffective in boosting the first-time buyer market.

The increased number of first-time buyers is expected to push up house sales and has contributed to a rise in prices.

House prices increased by 4.1 per cent in February, according to Rightmove, the fastest increase since 2002.

Miles Shipside, director at Rightmove, said: “The biggest jump in new sellers’ asking prices for nearly 10 years indicates there is pricing power if you are selling the right type of property in the right place where enough potential buyers have access to funding.

“If your local market does not have those characteristics and your price-pump is based on little more than seasonal optimism and an estate agent’s hot air, then be prepared for buyer response to be a let-down.”

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