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Mortgage lending up 14 per cent for December

Gross mortgage lending reached £13.7bn in December, up 14 per cent from November and 3 per cent from December 2008.

According to the Council of Mortgage Lenders, this is the first time the annual monthly comparison has been positive since October 2007 although, behind 2008, £13.7bn remains the second lowest figure for December since 2001.

Lending totalled £39.1bn in the fourth quarter, up slightly from £39bn recorded the previous quarter but down by 14 per cent on the last three months of 2008. The CML says there is generally a 6 per cent drop between lending in the third and fourth quarters.

Lending totalled £143.7bn for 2009 as a whole, beating the CML’s annual forecast of £141bn. But this figure is down 43 per cent from £253bn in 2008 and the lowest annual total since 2000, where it was £119.8bn.

CML economist Paul Samter says the strong December figure could be a result of people rushing to complete before the Government’s stamp duty holiday ended.

He says: “The December figure is surprisingly strong as there is typically a small decline in the month.

“Evidence suggests the rise was driven by a surge in house purchase completions as remortgaging still remains exceptionally weak.

“The most likely explanation is that buyers of cheaper property wanted to complete their transactions before the end of the year to beat the end of the stamp duty holiday.

“If there has been a ‘bunching’ of sales to beat the rise, mortgage lending may see a larger than usual seasonal drop-off in the early part of 2010.

“But there is every reason to expect a gradual improvement in the latter part of the year.

“With a gradual pick up in economic growth and wider access to credit, 2010 will almost certainly be a better year in the mortgage market than 2009.”

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