World News Today: UK mortgage lending falls by 13%

Friday, February 18, 2011

UK mortgage lending falls by 13%

The mortgage market is generally slow at the turn of the year

UK mortgage lending fell by 13% in January compared with December to the lowest level for a year at £9.2bn, lenders say.

This was still 5% higher than the same month a year earlier, the Council of Mortgage Lenders (CML) said.

The mortgage market was likely to "remain constrained" in the coming months, the group said.

This reflected the "sluggish" state of the UK economy as a whole, as well as a lack of demand, it added.

All the recently published data have shown a lack of any impetus of growth in the mortgage and housing markets, according to CML economist Peter Charles.

He said that the year-on-year rise in mortgage lending in January was distorted by the low levels a year ago - owing to the hangover from the end of the stamp duty holiday.

He offered little cheer for first-time buyers, saying that lenders were still being pushed towards less risky customers owing to lending restrictions. This made things difficult for those unable to offer a large deposit.

"There is little likelihood of any significant improvement in the mortgage market through the course of this year," he said.

"In consequence, it is difficult to see much improvement in opportunities for first-time buyers."

Earlier in the week, the CML released figures showing that many first-time buyers must save the equivalent of more than a year's salary to be able to afford a deposit for a home.

The typical deposit stood at £12,700 at the start of 2007, but rose to £31,500 by the second half of 2010.

The data was released when housing minister Grant Shapps summoned various parties to "frank and open" discussions on difficulties facing first-time buyers.

This article is from the BBC News website. � British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.