Gross mortgage lending falls 6% in December

The CML published its monthly market commentary today and said that the latest mortgage lending figures were the lowest, for a December, in over a decade and the fourth month in a row where the monthly outturn has been weak.
The latest figures show an 18% drop from the £13.3 billion in December 2009, although the stamp duty concession of 2009 has distorted the figures with many households bringing forward planned purchases to take advantage of this.
For 2010 as a whole, total lending was £136.3 billion, slightly above the CML’s annual forecast of £135 billion. However, the figure of £143.3 billion in 2009 means that there has been a drop of 5% and the lowest annual total since 2000 (£119.8 billion).
The CML acknowledge that recent inflation pressures make it likely that there will be a rate rise sooner than previously expected although they expect that the base rate is unlikely to exceed 1% this year.
CML economist Peter Charles says:
"Money market rates have recently moved higher in anticipation of a rise in base rate and some lenders have recently reflected these increases in their product pricing. Against this backdrop, consumer demand may be weaker than we would otherwise have expected. Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payments for most mortgage holders. Consequently we believe there will be little change in the level of arrears this year, and we do not anticipate revising our current arrears forecast."
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