Mortgage lending fell sharply during February, banks and building societies said yesterday, the latest evidence that the housing market slowdown is continuing.
The Council of Mortgage Lenders (CML) said lending in February totalled £17.2bn, fractionally below January's figure of £17.3bn, but 18 per cent down on the same month last year.
Just 39 per cent of February's loans were for house purchases, the lowest proportion since May 2003, with lenders increasingly forced to rely on the remortgage business.
The CML said the number of loans for house purchase fell from 63,000 in January to 59,000 in February, the lowest monthly figures since records began in 1998.
Figures from the British Bankers Association (BBA), also published yesterday, revealed a similar picture. Its members made mortgage advances of £4.8bn in February, but although this was £600m more than in January, lending was 11 per cent down on the same month last year.
The falls reflect continuing nervousness about the state of the housing market. Halifax's most recent figures showed a 0.5 per cent fall in house prices during February, while Nationwide Building Society said the market was just 0.5 per cent up last month.
Peter Williams, the CML's deputy director, said February's poor lending figures were partly seasonal. But he warned: "Although we expect to see some pick-up in activity during the spring, neither transactions nor price increases will reach last year's levels."
David Dooks, the BBA's head of statistics, added: "February's mortgage lending was slightly higher than expected, but it was only marginally above the recent trend."
Analysts are particularly concerned about the continuing absence of first-time buyers from the housing market. The CML said just 30 per cent of loans made in February were to buyers joining the property ladder for the first time. A doubling in the level at which stamp duty becomes payable on property purchases, announced by Gordon Brown in Wednesday's Budget, is expected to be of only limited help to first-time buyers.
The CML predicts average house prices across Britain will grow by 4 per cent this year.Reuse content