The CML reported that the mortgage market is continuing its soft landing with gross mortgage lending falling marginally in December to £21.3 billion compared with £21.7 billion in November and was 13 per cent lower than the December 2003 figure of £24.6 billion.
Lending for house purchase accounted for £9.8 billion in December, up from £9.1 billion in November and it accounted for 46 per cent of all lending. Out of a total 1.2 million loans for house purchase in 2004, 31 per cent were for first-time buyers with the typical first-time buyer borrowing 86 per cent of the value of the property down from 89 per cent in 2003. In 2004 home movers were typically taking out loans at 64 per cent LTV, compared to 71 per cent in 2003. In parallel, typical income multiples have risen, with first-time buyers in 2004 borrowing an average of 3 times their income and movers 2.9 times.
Remortgage lending in December totalled £9.4 billion, nearly 10 per cent down on the November figure of £10.4 billion but similar to last December’s £9.5 billion. Remortgaging accounted for 44 per cent of total lending in December and 43 per cent for the year as a whole.
Michael Coogan, director-general of the CML, said: “While 2004 showed an increase in year-on-year lending, the figures were indisputably weakening by the end of the year. Going into 2005 we expect the slowdown to continue into the spring. Over the year as a whole we anticipate a stable market with a healthy level of activity but without the dramatic increases in house prices and lending volumes experienced in 2004.”
Meanwhile the BSA announced that building societies gross advances amounted to £3,108 million in December 2004 decreasing from £3,997 million in December 2003.
Adrian Coles, director-general of the BSA, said: “Once again the figures confirm the sharp deceleration in the market since the beginning of the year. The festive period is never a busy one for lending but even taking this into account the slowdown over the last few months is clear. Higher interest rates, a puncturing of the air of confidence surrounding the market and the introduction of mortgage regulation are all casual factors.”
However the latest figures released from the BBA show that total sterling lending to the UK private sector showed a net increase of £15.6 billion (plus-1.5 per cent). The figure was stronger than both November’s rise of £11.3 billion and the average rise for the previous six months of £12.2 billion. Net mortgage lending rose by £5.7 billion with the rise stronger than in recent months.
BBA director of statistics David Dooks said: “After four months of slower mortgage lending growth, December saw an underlying monthly rise similar to those seen in the first half of last year. It is likely, however, that this partly reflected a processing catch-up following the advent of mortgage regulation and the competitive attractiveness of specific products.”
Ray Boulger, senior technical manager at Charcol, said: “The CML figures are the ones to focus on. Regulation is still having an impact on these figures and with December being renowned as a quiet month I see the figures as being quite encouraging and don’t support the talk in some areas of a crash in the market.”
