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
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Claims Administrator

    £16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

    Recruitment Genius: Senior SEO Executive

    £24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

    Recruitment Genius: Online Customer Service Administrator

    £16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

    Recruitment Genius: Digital Marketing Executive

    £18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

    Day In a Page

    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

    Everyone is talking about The Trews

    Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
    'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

    'Queer saint' who bankrolled artworld giants

    British culture owes a huge debt to Peter Watson, says Michael Prodger
    Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

    Pushkin Prizes brings countries together

    Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
    14 best kids' hoodies

    14 best kids' hoodies

    Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
    Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

    The acceptable face of the Emirates

    Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk