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Mortgages are still cooling as purchases fall

Gross mortgage lending fell in January to 17.9bn, says the Council of Mortgage Lenders in its latest survey.

The figure is 16 per cent down on December 2004 where lending was 21.3bn. The total for January last year was 21.8bn.

The main fall was in lending for house purchases while remortgaging figures fell only marginally. Lending for purchases accounted for 7.1bn in January, 29 per cent lower than December’s 10.2bn and 30 per cent lower than January 2004’s total of 10.2bn. The number of loans for house purchases fell from 23,800 in December to 18,900 in January 2005.

The CML says the size of the fall is partly seasonal but it also reflects the cooling housing market where purchase lending accounted for 40 per cent of total lending in January compared with 47 per cent in January last year. Remortgaging was down slightly at 9bn in January from 9.1bn in December 2004.

The proportion of loans to first-time buyers rose slightly to 30 per cent, up from 28 per cent from December and 27 per cent in January last year.

CML deputy director general Peter Williams says: “Overall, the picture is consistent with the CML’s expectations of a cooler but still active housing market. Lending this year will undoubtedly be less buoyant than in 2004 but the decline in lending levels in January reflects a strongly seasonal element.”

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