Stamp duty rush prompts drop in January mortgage lending

Gross mortgage lending stood at £9.1 billion for the first month of the new decade, newly-released figures from the Council of Mortgage Lenders CML show.

This represents a 32 per cent fall in lending when compared to the total recorded in December 2009, as well as the lowest monthly figure seen since February 2007.

However, while acknowledging the drop is significant, the CML has largely attributed this discrepancy to the fact that many buyers sped up their home purchases and completed them in December so as to take advantage of the government's stamp duty holiday.

Paul Samter, an economist at the organisation, said: "The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted 12 months ago.

"More recent developments have been influenced by the end of the stamp duty holiday, and are likely to foreshadow a larger than usual seasonal drop off in activity in the early part of this year."

He added that borrowers will continue to be shielded from the worst of the recession as the Bank of England opts to keep the base rate of interest down.

Meanwhile, JP Morgan has warned that banks may have to raise their charges, including those covering mortgage lending, by as much as a third if they are to maintain current levels of profit.

Moneyextra.com recommends you take independent financial advice before acting on any article

Back

2010-02-18 14:06:00 © Moneyextra.com