Fall in UK mortgage lending

There was little Christmas cheer for the housing market today with three sets of figures providing further evidence of slowing sales.

The Council of Mortgage Lenders, the British Bankers Association and the Building Societies Association all reported mortgage lending was continuing to weaken.

Figures from the CML showed gross lending fell by 4% in November, with lower lending for house purchase – down by £1bn (€1.46bn) on the previous month – fuelling the decline.

The number of loans for house purchase stood at 85,000 in November, a year-on-year fall of 25% and the lowest recorded since February 2003.

But remortgaging held up, growing to £10.6bn (€15.5bn) last month, compared with £10.2bn (€14.9bn) in October and £10.8bn (€15.8bn) a year ago.

But the number of mortgage approvals in November suggests that the decline in lending looks set to continue into the new year, the CML said.

CML director-general Michael Coogan said: “The buoyancy of the housing market in the first half of the year means that the number of transactions in 2004 is likely to reach a 15-year high.

“It is inevitable that there will be a decline in activity going forward. January and February are traditionally weaker months for lending, and so we expect the figures to reflect a market slowdown until the spring.

“What is apparent is a picture of a slowing market, but one that should remain stable as we return to more normal volumes of lending over 2005 as a whole.”