The CML’s latest report shows gross mortgage lending declined by 13% to an estimated £9.2 billion in January, £10.6 billion in December. There was, however a 5% rise from £ 8.8 billion in January 2010 giving the first year on year increase since August 2010. Comparisons with the beginning of last year however are distorted as many house purchases were brought forward in the closing months of 2009 to take advantage of the stamp duty holiday which expired at the end of that year.
CML economist Peter Charles said:
“The Bank of England’s Inflation Report this week noted that the UK banks face a significant funding challenge over the next couple of years: in total, including funding supported by the public support schemes, around £400 billion to £500 billion of wholesale term debt is due to mature by the end of 2012. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained.
As a greater degree of equilibrium is restored to financial markets, the availability of funding for mortgage lending should improve from current levels to support more normal levels of activity. However, the unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid 2000s is unlikely to return.”
David Whittaker, managing director of Mortgages For Business, said:
“Imploring lenders to lend more this year will be as fruitful as asking Ed Balls to quieten down — it simply won’t happen — and these figures highlight how important the private rental sector is going to be over the next few years. Until the mortgage market opens fully to first-time buyers it will continue to stagnate, leaving hundreds of thousands of people pouring into the rental sector. Luckily, the buy-to-let market is showing improvement and will go from strength-to-strength this year as landlords capitalise on flat house prices and rising rents; however, whether they will be able to keep up with demand remains to be seen.”
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