At £20.1 billion, gross lending in February was still 15% higher than in February last year. But it was 6.5% lower than in January, and 26% below the peak of £27.3 billion in October last year.
The fall in lending is not unexpected, as it follows previous seasonal patterns. It remains too early to say whether it reflects any underlying reduction in consumer appetite for borrowing.
The bulk of the fall is accounted for by a drop-off in remortgaging, which was £1 billion lower in February than January. At £8.3 billion, remortgaging was at its lowest level for a year. It accounted for 41% of total lending, compared with 44% in January and 47% last February.
Lending for house purchase fell by £200 million, to £9.8 billion. But this was still well above last February's figure of £7.2 billion. In terms of the share of lending, house purchase accounted for an increased 49% of total lending, compared with 47% in January and 41% last February.
First-time buyer activity appeared to strengthen a little in February, although caution is needed on the basis of a single month's figures. But both the number and the porportion of loans to first-time buyers were up on last month. First-time buyers represented 30% of all house-buyers taking out a mortgage.
In terms of interest rate preferences, consumers continued to head back towards variable rates as the price gap between variable and fixed rates widened further. Fixed rates accounted for 21% of new lending (at an average rate of 4.85%), while variable rates accounted for 77% (at an average rate of 4.57%). This is in marked contrast to the situation six months ago when the average new fixed rate was 35 basis points cheaper than the average new variable rate, and fixed rates accounted for 47% of all new lending.
Commenting on the figures, CML Director General Michael Coogan said:
"Lending remains very strong, but we still expect it to moderate as the year goes on. There is no obvious sign of any let-up in affordability problems, but at least yesterday's Budget avoided imposing any new or increased taxes on home-buyers.
"With the Budget proposals on Property Investment Funds, the two new Treasury-commissioned reports and recommendations from Miles and Barker, and the prospect of statutory mortgage regulation coming in at the end of October, there are plenty of examples of the Government's willingness to intervene in the housing and mortgage markets. We are determined to ensure that a strategy for sustainable home-ownership remains right at the centre of policymakers' thinking."
