Mortgage Lending Fell 26% in January
A drop in the level of mortgage approvals in January has been reported by the Council of Mortgage Lenders, casting further negative light on the future of the UK housing market.
The 26% fall meant that the number of house purchase mortgages fell to 28,500, a 12% drop in the number approved in comparison to January 2010. A number of different factors have been to blame for this decrease.
A general feeling of uncertainly around the economy since the announcement of government austerity measures, as well as increases in tax and inflation are considered to be one reason for a lack of new mortgage approvals. The weather, which was extremely cold this winter, has also been blamed.
First time buyer mortgages saw a fall in number of 28% to 10,500, in line with the general trend. It is also worth noting an increasing rate of size of loan to house value, suggesting lenders are willing to lend slightly larger first time buyer mortgages in relation to property value than this time last year.
Director General of the Council of Mortgage Lenders, Michael Coogan said: "The bad winter weather and uncertainty over interest rate rises will have exacerbated the fall in lending in January, so it would be premature to draw any firm conclusions about activity levels over the next few months. The market remains stable at low levels of transactions."