House purchase loans fell by more than three times the decline in remortgages in January, according to data released today by the Council of Mortgage Lenders.
This emphatically demonstrates the effect on the mortgage market from the end of the temporary stamp duty holiday in December.
There were 49% fewer house purchase loans in January than in December but only 15% fewer remortgage loans. However, the 32,000 loans for house purchase, worth £4.7 billion, were up from the low of 23,000 (worth £3.1 billion) seen in January 2009. Conversely, the 24,000 loans for remortgage, worth £3 billion, were down from 45,000 (£6.2 billion) a year ago. This is the lowest monthly level of remortgage activity – both by number and value – in eight years of available data.
First-time buyers recorded the largest drop among house purchasers, with a 54% drop (55% by value) from December to January, reflecting the fact that a high proportion would usually fall into the £125,000-£175,000 property value category and rushed through their purchase to complete in December.
There were 11,300 first-time buyer loans, worth £1.3 billion, in the month, down from 24,800 (£2.9 billion) in December 2009, but still up from 8,600 (worth £900 million) in January 2009.
Commenting on the data, CML director general Michael Coogan said: “It was a quiet start to the year. Lending volumes in January were low, but we had predicted this would happen due to the end of the stamp duty holiday distorting December’s figures.
“When December and January data are taken together, they show little change in underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier. We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”