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| TUESDAY 22ND FEBUARY 2005 |
 MORTGAGE
LENDING FALLS BY 26%
The latest survey from the Council of Mortgage
Lenders shows that gross mortgage lending declined
in January to £17.9 billion, 16% down on
the £21.3 billion in December and 18% lower
than the £21.8 billion lent in January last year.
The vast bulk of the decrease was in lending
for house purchase, while remortgaging fell only
marginally.
Lending for house purchase accounted for £7.1
billion in January, 29% lower than the December
2004 figure of £10.0 billion, and 30% lower
than last January's figure of £10.2 billion.
Some of this decline is seasonal, and entirely
expected in any January - house purchase lending
fell by 23% from December 2002 to January 2003,
and by 19% between December 2003 and January
2004. However, the size of the decrease also
reflects the recent cooling in the housing market
- and house purchase lending accounted for only
40% of total lending in January, compared with
47% in December 2004 and 47% in January last year.
Reflecting the decline in the volume of lending,
the number of loans for house purchase fell from
85,000 in December to 63,000 in January, a fall
of 26%. This again reflects a seasonal trend,
although the size of the fall again also reflects the cooling in the market.
The proportion of loans to first-time buyers
rose slightly to 30%, up from 28% in December
and 27% in January last year - although the actual
number still fell from 23,800 in December 2004
to 18,900 in January 2005 (26,200 in January
last year), reflecting the sharp reduction in
the overall number of loans for house purchase.
Income multiples continued to edge up for both
first-time buyers and movers, although they remain
lower than last autumn. First-time buyers borrowed
an average 87% of the value of their property,
against an average 68% for movers. Average fixed
and capped rates fell slightly in January although
average variable rates rose, but their relative
popularity was virtually unchanged, with 58%
of borrowers choosing a variable rate and 42%
a fixed rate.
Commenting on the figures, CML deputy director
general Peter Williams said: "These figures
show beyond doubt the recent slowdown in the
housing market. But, as we have said before,
the picture this year is likely to be lumpy rather
than smooth, and it is impossible to gauge the
future direction of the market from one month's figures."
"Confidence measures suggest that consumers
began feeling more confident again in January,
and this coincides with anecdotal evidence from
estate agents suggesting a pick up in sales."
"Overall, the picture is consistent with
the CML's expectations of a cooler, but still
active, housing market. Lending this year will
undoubtedly be less buoyant than in 2004, but
the decline in lending levels in January reflects
a strongly seasonal element and is unlikely to
continue to be so marked as 2005 progresses."
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