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Mortgage lending slows as Christmas nears

Mortgage lending slows as Christmas nears

Category: Mortgages

Updated: 20/12/2010
First Published: 20/12/2010

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The traditional seasonal slowdown in the property market saw gross mortgage lending fall in November, the Council of Mortgage Lenders (CML) has revealed.

Total mortgage lending of £11.1 billion represents a 5% drop on the £11.6 billion worth of loans approved in October.

The figure was also 10% lower than that reported a year earlier, although the CML said this was likely to be a reflection of the abnormally high lending which occurred towards the end of last year when the Government's stamp duty holiday was coming to an end.

However, it is also the lowest November total seen since 2000, making it the fifth consecutive month where gross mortgage lending has been at its weakest since the equivalent month in 2000.

"The fall in gross mortgage lending in November reflects the usual seasonal slowing of activity at this time of year, and reinforces the picture of a continuing flat market," said Bob Pannell, CML chief economist.

"Comparisons with the year earlier are somewhat distorted, as some households brought forward house purchase activity into the closing months of 2009 to take advantage of the stamp duty concession.

"But both demand for mortgage borrowing and the supply of funds for lending remain heavily constrained."

David Whittaker, managing director of Mortgages for Business, said that although the figures show a relatively steep decline in lending, the end is by no means nigh.

"The last months of the calendar year normally see a decline in the volume of property sales, as consumer spending increases and buyers tend to prefer to await the New Year before making a transaction," he added.

"The year-on-year decline is distorted by the stamp duty rush at the end of 2009 and the main conclusion to draw from this figure is that the stamp duty holiday had a major influence on buyer demand.

"That said, the month-on-month drop is probably larger than can be explained by seasonal factors alone. Lenders are still erring on the side of caution as the impacts of spending cuts and future Bank rate rises remain uncertain.

"This will continue to mitigate demand for property in the New Year, but with rental yields remaining high, the current market represents a great opportunity for anyone who is able to secure a mortgage."

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