The mortgage market finished 2010 on a flat note, with lending down on a monthly and annual basis.
Gross mortgage lending in the month totalled an estimated £11 billion, according to the Council of Mortgage Lenders (CML), a 6% fall from November when £11.7 billion was lent.
It was the fourth month in succession that lending has been at its weakest since 2000, reflecting a market where access to credit is still heavily restricted.
The figure is 18% lower than £13.3 billion in December 2009, although comparisons are distorted as some activity was heightened a year ago as a result of the stamp duty holiday coming to an end.
Lending totalled £34.4 billion in the fourth quarter, down from £37.9 billion in the previous quarter and 11% lower than the last three months of 2009 as a whole (£38.7 billion).
Over 2010, lending totalled £136.3 billion, slightly above the CML's forecast of £135 billion. However, this is down 5% from £143.3 billion in 2009 and the lowest annual total since 2000 (£119.8 billion).
The body has acknowledged that sky high inflation could being about a rise in the base rate of interest sooner than was originally expected, although it says it is not likely to rise above 1% in 2011.
"Money market rates have recently moved higher in anticipation of a rise in base rate and some lenders have recently reflected these increases in their product pricing," said Peter Charles, economist at the CML.
"Against this backdrop, consumer demand may be weaker than we would otherwise have expected. Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payments for most mortgage holders."
"Consequently we believe there will be little change in the level of arrears this year, and we do not anticipate revising our current arrears forecast."
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