Mortgage lending increases for fifth month in a row

Mortgage lending increased year-on-year for the fifth month in a row in December, a key trade association said today, but prospects for the housing market in the year ahead are still “difficult to call”.

Gross mortgage lending in December was an estimated £11.7 billion, the Council of Mortgage Lenders (CML) said, which is a 12% drop from November but a 12% rise from the previous December.

This means mortgage lending for the whole of 2011 came in above the CML forecast at £140 billion, up 3% from £136 billion in 2010.

CML chief economist Bob Pannell said: “Continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

The drop in lending between November and December was amplified by the smaller number of working days in the month, the CML added.

Lending was up 11% year on year in the final quarter at £37.3 billion, the association added.

Mr Pannell said: "The closing months of 2011 saw stronger mortgage lending activity and housing transactions, despite the fact that short-term economic prospects are challenging."

The CML recently reported a pick-up in lending in November as the number of homeowners taking up fixed-rate deals hit the highest level in more than two years.

Mortgage providers - such as Nationwide and the Post Office - have slashed rates on a range of fixed-rate mortgages as the Bank of England continues to hold its base rate at a historic low of 0.5%.

PA