This reflects the fact that fixed rates have become more expensive, with the average new fixed mortgage rate reaching 4.68%, compared with an average new variable rate of 4.41%. When fixed-rate popularity peaked at 47% last August, the average fixed rate was 0.35% lower than the average variable rate.
Gross lending during January fell, amounting to £21.5 billion compared with £23.9 billion in December, a drop of 10%. However, gross lending remained 11% above last January's figure of £19.3 billion.
The fall in gross lending was driven entirely by a drop in lending for house purchase (which appears to be a regular seasonal feature, experienced for some years in January as there is a lull after the pre-Christmas rush to complete households' moves). Lending for house purchase fell from £12.2 billion in December to £10.0 billion in January, but was still 28% higher than the January 2003 figure of £7.8 billion.
The number of house purchase loans fell accordingly, from 110,000 transactions in December to 96,000 in January (but 9% higher than the 88,000 in January 2003).
Remortgaging rose to £9.4 billion in January (up from £9.2 billion in December), but remained lower than the £9.7 billion figure of January 2003, and well below the £11+ billion levels experienced in several months last year.
The familiar plight of first-time buyers continued, with the proportion of first-time buyers remaining at just 27% for the third month running. However, there is no apparent relaxation of credit standards, with both percentage advances and income multiples falling slightly for both first-time buyers and movers.
Commenting on the figures, CML Director General Michael Coogan said:
"It is too early to say what January's figures show us for the next few months, as there is always a strong seasonal drop early in the year. However, we continue to expect lending growth to moderate in 2004, and the level of remortgaging to come down a little too.
"Once again, the figures illustrate just how price-sensitive consumers are to the upfront costs they face. With the cost of fixed-rate mortgages having overtaken the cost of variable-rate loans, borrowers are turning away from them in favour of variable rates - even though there is a widespread acknowledgement of the likelihood that interest rates are set to rise further this year. This suggests that consumers continue to be swayed more by current price comparisons than by the desire for future price certainty."
