Mortgage lenders suffer stamp duty backlash

Published on Thursday 18 February 2010 21:53

MORTGAGE lending plummeted to a ten-year low during January.

Figures released yesterday show the housing market suffered a lull following the end of the government's stamp duty holiday.

Total mortgage advances dived by 32 per cent to 9.1 billion during the month, the lowest level since February 2000, according to the Council of Mortgage Lenders (CML).

The group said there was typically a fall-off in lending during January, as househunters put moving plans on hold over Christmas.

But this year's drop was larger than usual, and had been caused by people buying lower-value properties rushing to push through their purchase before the stamp duty holiday ended at the beginning of this year.

The drop in lending comes after the group reported a "surprisingly strong" figure for December, with mortgage advances jumping by 14 per cent during the month, bucking the usual seasonal trend.

CML economist Paul Samter said: "We remain in a period of uncertainty for the housing market and economy at large.

"The market certainly improved over the second half of last year and started 2010 in better shape than most would have predicted 12 months ago.

"More recent developments have been influenced by the end of the stamp duty holiday and are likely to foreshadow a larger than usual seasonal drop-off in activity in the early part of this year."

Brian Murphy, head of lending at the Mortgage Advice Bureau, said: "We shouldn't read too much into the January data, which is a result of both seasonal factors and December's stamp duty holiday rush.

"Overall, the market is in a far better state, with mortgage availability at a 12-month high.

"This time last year the mortgage market was in a coma, but in the past three to four months a lot more products have become available, as lenders once again start fighting for market share."

Figures released by the Bank of England yesterday also showed a fall in both mortgage lending and the number of loans approved for house purchase during January.