Mortgage lending suffered a seasonal decline in January but was bolstered by stronger remortgage business.
Gross lending by banks and building societies dropped from £10.1bn in Decem-ber to £9.5bn in January, according to figures from the Council of Mortgage Lenders and the Department of Env-ironment, Transport & the Regions. But the figure was still significantly above the £7.4bn gross lending achieved in January last year.
The CML says the annual rise is due to strong levels of remortgaging, which totalled £3.1bn in January, up from £2.9bn in December and £1.8bn a year ago. It predicts further increases in remortgaging throughout the year.
Lending for house purchase fell to £5.8bn in January from £6.7bn in December, with the number of new loans falling to 77,000 from 91,000.
The average mortgage rate on new loans fell slightly to 6.12 per cent in January from 6.16 per cent in December, with average fixed rates dropping to 6.23 per cent from 6.39 per cent following the Bank of England's base rate cut .
Variable-rate mortgages accounted for 65 per cent of new loans taken out in January, down from 67 per cent in December, with fixed-rate mortgages making up the remaining 35 per cent.
CML deputy director Peter Williams says: “The figures point to a slight seasonal dip in mortgage lending in January compared with recent months. But the recent drop in interest rates together with strong competition in the market is likely to result in increases in remortgaging activity throughout 2001.”