Gross mortgage lending drops 10 per cent in November
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Gross mortage lending totalled £12bn in November marking a 10 per cent drop from £13.3bn in October.
The figures from the Council of Mortgage Lenders show that gross mortgage lending is down 14 per cent from £13.9bn in November of last year.
The CML says that although a modest seasonal decline is typical between October and November, the 10 per cent fall is a little larger than usual.
CML economist Paul Samter says: “There is little reason to expect much underlying change in the coming months. There could be a modest decline in underlying house buying activity in early 2010 due to the stamp duty holiday ending, with activity “bunching” over the last few months of 2009. But seasonal factors are likely to be the dominant driver over the next few months.
“There has been a modest increase in the availability of mortgage credit recently, including some tentative signs of a few higher LTV products emerging. But there is no sign of a swift recovery in lending volumes, especially with remortgaging set to remain at subdued levels while low interest rates persist.”
The Mortgage Advice Bureau head of lending Brian Murphy says: “The CML are right that no clear trends on lending volumes will emerge until at least a few months into 2010 when the seasonal lull is behind us. It’s hard to read too much into this latest data.
“One trend that is clear, though, is that more and more borrowers are choosing variable rate mortgages over fixed rate mortgages.
“Borrowers believe that the low interest rate environment is here to stay, and that even if rates were to rise by 1-2 per cent, the increase in monthly repayments can be comfortably accommodated and still represents better value than the most competitive fixed rate deals on the market.
“Our latest figures show that variable rate mortgages made up 53 per cent of all mortgage transactions in November, compared with 43 per cent in October.
“The percentage of fixed rate mortgage transactions has fallen dramatically from a high of 90 per cent in May this year to a low of 47 per cent in November.”
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