Mortgage lending in January was £9.1bn, down 32% over December’s figure of £13.4bn, the Council of Mortgage lenders (CML) has announced.
However, a drop in lending and demand for mortgage deals is a normal seasonal feature at the end of every year, and this year the drop was greater than usual due to the number of buyers who rushed through their mortgage deal to qualify for the favourable rates of stamp duty, which ended on December 31st. The stamp duty holiday was particularly relevant to first time mortgage buyers.
The CML commented that demand for mortgage deals and general activity in the housing market is likely to be sluggish in the coming weeks, following the December rush, but that the mortgages market is still more buoyant than they would have predicted 12 months ago.
While consumer demand for mortgages may be quiet at present, the availability of mortgage offers has shown a marked improvement. The range of available mortgages is greater than at any time during the last year, as lenders begin to compete for market share.
Mortgage borrowers should act quickly, rather than take the current low interest rates for granted, however. Levels of inflation in the final quarter of 2009 have led many mortgage advice experts to predict that an interest rate increase could now be possible in the second half of this year, increasing the cost of mortgage deals.
