This is a 14% fall from December’s gross lending total of £16.6bn and 11% lower than the £16.1bn lent the previous year as the majority of lenders ramped up lending ahead of the incoming Mortgage Market Review rules in April.
CML chief economist Bob Pannell said: “The softer pace of approvals through the second half of last year contributed to the relatively weak pace of mortgage lending in January.”
He added: “Although seasonal factors will continue to weigh on activity levels for a while longer, we expect the underlying picture to pick up over the coming months, in line with stronger earnings and employment, gentle interest rate trends and recent Stamp Duty changes.”
The mortgage lender trade body expects total mortgage lending to hit £222bn this year.
Henry Woodcock, principal mortgage consultant, Iress, said the firm expected the lending pace to pick up soon.
“There are signs that acceleration in house price growth is easing, which will be warmly received by first-time buyers, while the buy to let market is buoyant and will continue to boost activity. Equally, competition in the mortgage market has intensified, which is only bringing good news for prospective borrowers,” he said.
He added with new lender entrants and rates at their lowest ever, wage growth and slower inflation can only give the market further momentum.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said lenders continue to undercut each other on rates but the step will be looser criteria.
“A couple of building societies – the Ipswich and the Melton – have this week said they will consider lending to borrowers transferring from other lenders under the transitional arrangements in the mortgage market review. This is a crucial step and could be a lifeline for mortgage prisoners who are a good credit risk but are struggling to remortgage because they are self-employed, require interest- only or are 50-plus. We expect other lenders to follow suit.’
Meanwhile, lending to first-time buyers hit its highest level in in eight years last year, according to the CML earlier this month. However, building society lending slowed in Q4 last year due to increased competition from banks and other mortgage lenders.
https://www.mortgagesolutions.co.uk/mortgage-solutions/news/2395645/first-time-buyer-lending-hits-highest-level-since-2007
https://www.mortgagesolutions.co.uk/mortgage-solutions/news/2395567/building-societies-report-lending-slowdown-in-q4
