CML notes fall in mortgage lending for January

on Mar 19, 2015

New data from the Council of Mortgage Lenders (CML) has revealed that despite the abundance of very competitive mortgage finance products currently available, lending levels dropped surprisingly at the start of the year. The CML said that just 41,400 mortgages were approved in January for UK borrowers. This was 26 percent lower than December’s figure and a drop of 16 percent on January 2014.

The data also shows that there was a decrease in the number of loans given to first time buyers in January. At 19,000, January’s total marks the lowest level of lending to this category of house buyer in 21 months.
January’s lending figures may have been weak because many potential first time house buyers were waiting for the 2015 budget announcement by George Osborne before committing to a mortgage. For those who did wait, the new Help-to-Buy ISA which was announced yesterday, may prove to be an incentive for some people to hold off even longer in order to take advantage of the terms of the new scheme.
The CML also reported that sales for November and December were down on the same months in 2013, despite the Bank of England saying the number of approved mortgages for these months rose slightly when compared with the same period in 2013.
This indicates that some buyers who have been approved for credit have yet to draw down their mortgages, which consequently could lead to a rapid jump in sales in the coming months as buyers seek to move quickly to avail of the approved funds before the draw down period expires.
Paul Smee, director general of the CML, commented:
“The traditional beginning-of-year seasonal lull in lending is slightly more prominent in house purchase lending than in previous years, especially in comparison to the particularly strong levels at the start of 2014. Affordability constraints remain a factor for would-be borrowers, but we are still projecting lending to pick up over the next few months.”

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