Mortgage lending slumps to 10-year low

Gross mortgage lending fell 32% in January compared with the previous month to hit its lowest monthly total for 10 years, figures from the Council of Mortgage Lenders (CML) show.

Gross lending was £9.1bn last month, down from £13.4bn in December and £11.5bn a year ago.

It was the lowest monthly figure since February 2000, when lending measured £7.9bn, and the lowest January total since January 2000, when gross lending was £7.4bn.

The CML attributes the fall to the huge boost in house purchase activity in December as borrowers rushed to complete their purchases before the end of the year to take advantage of the stamp duty holiday.

CML economist Paul Samter says: "We remain in a period of uncertainty for the housing market and economy at large.

"More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger-than-usual seasonal drop off in activity in the early part of this year.

"However, the Bank of England is likely to keep rates low which should continue to mitigate mortgage payment problems and help cushion borrowers from the worst of the recession."

Brian Murphy, head of lending at broker Mortgage Advice Bureau, says consumers should not place too much significance on January's figures.

"The drop is a result of both seasonal factors and December's stamp duty holiday rush. Overall, the market is in a far better state with mortgage availability at a twelve-month high.

"This time last year the mortgage market was in a coma, but in the past three to four months a lot more products have become available, as lenders once again start fighting for market share."