Figures from the Council of Mortgage Lenders (CML) has revealed that the amount of mortgage lending in the UK fell between November and December, but was up on December 2010. The CML added that it was difficult to predict how the UK mortgage market will perform over the next year.
Figures from the CML indicate that mortgage lending was up to £11.7 billion in December. This figure was a drop of 12% from around £13.3 billion in November, but was an increase of 12% from around £10.5 billion in December 2010.
Figures from the British Bankers’ Association (BBA) reflect the numbers from the CML. The banks indicated that their lending accounted for £9 billion in December and this was up by 12% on the figures for 2010.
However, the CML indicate that the total lending of £140 billion in 2011 was only 3% higher than in 2010 and warn that this reflected the low level of mortgage lending that had taken place in both 2010 and 2011.
The CML did indicate that the end of 2011 brought higher lending activity and more house purchases than the rest of the year and suggest that this could carry into next year. However, they indicated that problems in the eurozone will continue to impact on lending ability.
The BBA indicated that market activity remained low with a rise in new mortgage approvals but a fall in remortgaging. They pointed out that the figures for 2011 were similar to those for 2010 and added that the average house purchase value in 2011 also stayed at the same level, at around £145,000.
Figures from HM Revenues & Customs (HMRC) revealed that the number of house sales in 2011 fell by 1% from 2010, to 869,000 house sales. This figure is close to the lowest figure on record of 848,000 sales, which was recorded in 2009 (records began in 1978).
Experts indicate that a combination of mortgage rationing by lenders, rising unemployment, freezes on wage rises and high inflation have all impacted on the mortgage market over the last few years.
In 2013, the Financial Services Authority (FSA) will also introduce new rules to prevent the banks and other mortgage lenders from falling back on old lending habits. These will include a ban on mortgages that are higher than the value of a property. Other rules will prevent the people from obtaining a mortgage if they cannot prove that they have enough of an income to repay them.
The Bank of England have predicted that inflation will fall in 2012, and this will help to reduce the impact on peoples available incomes. It could, in turn, also have an impact on lending. The BBA advised that people are continuing to take a cautious approach to other forms of lending, such as loans, overdrafts and credit cards.
A spokesperson from the BBA said: “The household sector generally is focusing on debt repayment amid inflated household expenses and a continuing air of uncertainty, so we see a reluctance to let net borrowing rise, with people preferring to use their bank account cash forexpenditure.”