February mortgage-lending peak
Published 19/03/2010 | 10:04
Mortgage lending edged higher in February after diving by a third during the previous month, figures showed yesterday.
Around £9.2bn was advanced to borrowers during the month, 6% more than in January, when lending levels were hit by the end of the Government's stamp duty holiday, according to the Council of Mortgage Lenders (CML).
The group said it is “unusual” for advances to rise during February, although it added it is unsurprising this year as the December and January figures were distorted by the change to the stamp duty threshold. Despite the rise, lending during February was still the second lowest since February 2000.
Advances during the month were hit by a combination of the end of the stamp duty holiday and the wintry weather in January, which caused potential buyers to stay at home and had a knock-on effect on February's lending.
The fall in activity in the housing market saw Nationwide and Halifax reporting price falls of 1% and 1.5% respectively for February.
It remains to be seen if the drop was caused by one-off factors, or if it is the start of a new trend in the housing market, with many economists suggesting the recent recovery may have run out of steam. Despite the low level of lending during January and February, the CML said the figures are broadly in line with its forecast that lenders would advance a total of £150bn during 2010.
Paul Samter, CML economist, said: “Given the short-term weakness and distortions in the housing market, as well as more properties coming on to the market, it was perhaps unsurprising to see falls in some of the monthly house price indices in February.
“With activity unlikely to pick up much in the short-term, we would expect to see continuing price fluctuation in the coming months.” But he added that while they are better than a year ago, funding markets remain difficult, and this is likely to continue to limit mortgage availability.