ROOF Blog

Gross mortgage lending in January fell to the lowest level in 10 years as buyers were deterred by the end of the stamp duty holiday, figures showed this week – but experts have warned that lending could decline further as banks lose government funding support. According to the Council of Mortgage Lenders (CML), gross mortgages totalled just £9.1bn in January, down 32 per cent from the £13.4bn in December. This is the lowest monthly total since February 2000, when gross lending was £7.9bn. While a seasonal fall is usual between December and January, the CML said the drop was ‘larger than average’ due to higher purchase activity in December, as borrowers rushed to take advantage of the stamp duty holiday on properties valued less than £175,000.

Both the CML and the Bank of England agreed that mortgage lending edged up again in the last months of the year, against the usual seasonal downturn. The CML reported that gross mortgage lending reached an estimated £13.7bn in December, up 14 per cent on November. A rush of sales before the end of the stamp duty holiday and the prospective hike in VAT accounted for much of the improvement.

The Council of Mortgage Lenders (CML) reported yesterday that buy-to-let lending rose by 10 per cent in the three months to September, compared with the previous three months, after a period of near-hibernation for landlords who were hit particularly hard by the mortgage drought.

The CML said that buy-to-let demand for new purchases was ‘appreciably stronger’ than for remortgages, amid continuing lending constraints that force landlords to stay on their existing deals.

The CML pointed out that although the slight uptick in buy-to-let lending was welcome, it was from a low base.

Michael Coogan, director-general of the CML, said: ‘At this stage the recovery is modest, but the figures show that buy-to-let is here to stay.’

The Council of Mortgage Lenders (CML) has cut its forecast for the number of repossessions this year to 48,000.

Having anticipated 75,000 repossessions in 2009 in last year’s housing market forecasts, the forecast had already been revised down to 65,000 in June, but is now being cut again in recognition of lender forbearance, government measures and the beneficial effect of continuing low interest rates which are helping most borrowers facing difficulty to keep their homes.

Commenting on the latest arrears data and on the new forecasts, CML director general Michael Coogan said: ‘In terms of new lending next year, we expect a modest increase.

‘But it is difficult to see the case for a dramatic upturn in the absence of significant improvement in the wider economic picture. There is a risk that public spending cuts and higher taxes could choke off recovery. So, although we have become more optimistic, we remain cautious about market prospects.’

Northern Rock has had its busiest quarter as a mortgage lender since the credit crunch two years ago, lending £1bn in the three months to the end of September.

But the nationalised lender, which is to be split into a ‘good’ and ‘bad’ bank before being sold off, is continuing to suffer a rise in the number of customers falling behind on their mortgage payments.

In the third quarter 4.11 per cent of its mortgage customers were three months or more late on their repayments compared with an industry average, compiled by the Council of Mortgage Lenders, of 2.42 per cent.

The lender blames its problems with arrears on the Together product sold by the previous management which allowed customers to borrow up to 125 per cent of their value of their home.

Northern Rock chief executive Gary Hoffman stressed that the bank was trying to avoid repossessing the homes of customers facing payment difficulties:

‘We continue to invest a lot of effort in our approach to debt management and to providing the best possible support we can in all circumstances’, he said.