Mortgage lending dived to a 10-year low during January as the housing market suffered a lull following the end of the Government’s stamp duty holiday, figures showed yesterday.
Total mortgage advances dived by 32% to £9.1bn during the month, the lowest level since February 2000, according to the Council of Mortgage Lenders (CML). The group said there was typically a fall-off in lending during January as househunters put moving plans on hold over Christmas.
But it said this year’s drop was larger than usual, and had been caused by people buying lower-value properties rushing to push through their purchase before the stamp duty holiday ended at the beginning of this year.
The drop in lending comes after the group reported a “surprisingly strong” figure for December, with mortgage advances jumping by 14% during the month, bucking the usual seasonal trend.
It attributed the rise to increased demand as people buying properties costing up to £175,000 tried to complete their purchases before the threshold at which stamp duty kicks in returned to £125,000 at the beginning of this year.
It said 55% of homes purchased during the month cost less than £175,000, with 10,300 first-time buyers purchasing a property for between £125,000 and £175,000 — 63% more than in November.
But the CML warned that the rush by buyers to cash in on the stamp duty holiday in the final months of last year was likely to lead to a drop in activity during the early months of 2010.
CML economist Paul Samter said: “We remain in a period of uncertainty for the housing market and economy at large.”