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Mortgage approvals for purchase down 49% in January

The number of mortgages approved for house purchase dropped by 49 per cent in January following the end of the Government’s temporary lift in the stamp duty threshold, according to the Council of Mortgage Lenders.

Latest figures from the CML show 32,000 home purchase loans were approved in January, down sharply from 62,800 in December but still up by 38 per cent on the corresponding period last year.

The biggest fall was in mortgages approved for first-time buyers, down 55 per cent by value from the previous month.

A high proportion of these fall into the £125,000 to £175,000 value range, indicating that many rushed to complete their purchases before the re-introduction of the lower stamp duty threshold in January.

Remortgages also fell by 15 per cent. The 24,000 loans worth £3bn represent the lowest level of activity in the eight years since the CML began recording data and suggest that many borrowers are opting to remain on their lenders standard variable rates while interest rates remain low.

CML director general Michael Coogan (pictured) says: “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.”

He added: “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.”

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