Stamp duty change sees mortgage lending slump

Mortgage lending slumped to an eight-and-a-half-year low during January as the housing market suffered a lull following the end of the Government's stamp duty holiday, figures showed today.

The major banks advanced just £8.02 billion during the month, 26 per cent down on December's figure and the lowest level since May 2001, according to the British Bankers' Association.



The group blamed the fall on a combination of people rushing through purchases during December to beat the end of the stamp duty holiday, and the wintry weather during January hitting market activity.



Lending had been unusually strong during December, with advances totalling £10.92 billion, the highest figure for more than a year, during what is traditionally a quiet month for the housing market.



The rise was attributed to people buying lower value homes pushing through purchases before the stamp duty threshold fell from £175,000 back to £125,000 at the beginning of this year.









The figures are in line with data reported by the Council of Mortgage Lenders for January, which showed that total lending had fallen to a 10-year low of £9.1 billion.

David Dooks, BBA statistics director, said: "It was no surprise to see the January mortgage figures falling back from December, when transactions were being pushed through to beat the end of the stamp duty relief.



"There was a natural reaction in the January figures and the bad weather further suppressed market activity."



The BBA figures also suggested that lending is likely to remain subdued during the first quarter of this year, with the number of mortgages approved for house purchase falling to its lowest level for eight months of 35,083.



The figure is 23 per cent down on the level reported for December, which had been the highest for 26 months.



Loans in the pipeline for people remortgaging also dived to a 10-year low of 20,252 during January, while the number of people taking out buy-to-let mortgages or releasing equity from their property fell to its lowest level since records began in September 1997.



Howard Archer, chief UK and European economist at IHS Global Insight, said: "January's marked relapse in mortgage approvals was undoubtedly the consequence of both the very bad weather and some activity having been brought forward to late-2009 to beat the price threshold for stamp duty on house purchases moving back down from £175,000 to £125,000 at the start of January.



"The marked relapse in mortgage activity in January reinforces our suspicion that house prices are likely to suffer a correction at some point in 2010 and they will be essentially only flat over the year."



Unsecured lending remained subdued during January as the bad weather put people off shopping, while demand was also lower following Christmas.



People spent £5.6 billion on their credit cards during the month but, once repayments of £5.9 billion were taken into account, outstanding debt rose by £261 million due to interest and charges.



Borrowing through personal loans and overdrafts contracted for the 14th consecutive month with people repaying £334 million more than they were lent in January.



Savings levels also held up well, with people increasing their deposits by £2.46 billion, down on the previous month's figure but broadly in line with the recent six-month average.

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: DBA Developer - SQL Server

    £30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Customer Service Administrator

    £13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

    Recruitment Genius: Dialler Administrator

    £22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

    Ashdown Group: Contracts Manager - City of London

    £35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

    Day In a Page

    Blairites be warned, this could be the moment Labour turns into Syriza

    Andrew Grice: Inside Westminster

    Blairites be warned, this could be the moment Labour turns into Syriza
    HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

    The mystery of Britain's worst naval disaster is finally solved - 271 years later

    Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
    Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

    'I saw people so injured you couldn't tell if they were dead or alive'

    Nagasaki survivors on why Japan must not abandon its post-war pacifism
    Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

    The voter Obama tried hardest to keep onside

    Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen
    RuPaul interview: The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head

    RuPaul interview

    The drag star on being inspired by Bowie, never fitting in, and saying the first thing that comes into your head
    Secrets of comedy couples: What's it like when both you and your partner are stand-ups?

    Secrets of comedy couples

    What's it like when both you and your partner are stand-ups?
    Satya Nadella: As Windows 10 is launched can he return Microsoft to its former glory?

    Satya Nadella: The man to clean up for Windows?

    While Microsoft's founders spend their billions, the once-invincible tech company's new boss is trying to save it
    The best swimwear for men: From trunks to shorts, make a splash this summer

    The best swimwear for men

    From trunks to shorts, make a splash this summer
    Mark Hix recipes: Our chef tries his hand at a spot of summer foraging

    Mark Hix goes summer foraging

     A dinner party doesn't have to mean a trip to the supermarket
    Ashes 2015: With an audacious flourish, home hero Ian Bell ends all debate

    With an audacious flourish, the home hero ends all debate

    Ian Bell advances to Trent Bridge next week almost as undroppable as Alastair Cook and Joe Root, a cornerstone of England's new thinking, says Kevin Garside
    Aaron Ramsey interview: Wales midfielder determined to be centre of attention for Arsenal this season

    Aaron Ramsey interview

    Wales midfielder determined to be centre of attention for Arsenal this season
    Community Shield: Arsene Wenger needs to strike first blow in rivalry with Jose Mourinho

    Community Shield gives Wenger chance to strike first blow in rivalry with Mourinho

    As long as the Arsenal manager's run of games without a win over his Chelsea counterpart continues it will continue to dominate the narrative around the two men
    The unlikely rise of AFC Bournemouth - and what it says about English life

    Unlikely rise of AFC Bournemouth

    Bournemouth’s elevation to football’s top tier is one of the most improbable of recent times. But it’s illustrative of deeper and wider changes in English life
    A Very British Coup, part two: New novel in pipeline as Jeremy Corbyn's rise inspires sequel

    A Very British Coup, part two

    New novel in pipeline as Jeremy Corbyn's rise inspires sequel
    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Philae lander data show comets could have brought 'building blocks of life' to Earth

    Icy dust layer holds organic compounds similar to those found in living organisms