Mortgage lending in the UK made a slight recovery in February, edging up by six percent compared to the previous month, according to latest figures from the Council of Mortgage Lenders (CML).
Gross mortgage lending, which ignores loan redemptions, climbed to £9.2 billion in February compared to £8.7 billion on the previous month, which was the lowest in 10 years. CML said that the increase was unusual but not surprising for this year, given that the end of stamp duty holiday in December considerably affected the lending figures in that month and in January.
Lending figures last month declined six percent compared to the same period in 2009, when mortgage borrowers applied for £9.7 billion in home loans. But CML stressed out that the first two months of 2010 were broadly in line with its prediction for lending worth £150 billion for this year as a whole.
Paul Samter, an economist at CML, said that he is expecting to see signs of mortgage improvements, as confidence in the economy grows, but he added that “the need for the authorities to address the fiscal deficit will inevitably slow the economy. At the same time the funding markets, while certainly better than a year ago, remain difficult and will limit the flow of available housing finance.”
"Given the short-term weakness and distortions in the housing market, as well as more properties coming on to the market, it was perhaps unsurprising to see falls in some of the monthly house price indices in February. With activity unlikely to pick up much in the short term we would expect to see continuing price fluctuation in the coming months."
Andrew Montlake, director of independent mortgage broker Coreco, agreed that the availability of home loans was causing problems. He said that the upcoming election could also subdue borrowing. "We are not expecting borrowing levels to accelerate significantly in the run-up to the general election, and they may even fall back slightly post-election. Come the second half of the year we will know far more about how the mortgage and residential property markets are likely to fare in the short term,” he said.
"While it is considerably easier to get a mortgage than it was a year ago, it is still considerably more difficult – and rightly so – than three years ago. There has been a slight improvement in product availability and rates in the 80%-85% loan-to-value range, although at 90% LTV the market is still very limited."