Mortgage lenders in the UK advanced 26 percent less funding for home purchases in December compared to the previous month, a sharp decline attributed to greater uncertainty in the market.
The Council of Mortgage Lenders (CML), which released the data on Friday, noted that purchasers may have been put off by government spending cuts, higher inflation, an increase in sales tax, extreme winter weather in December and doubts about when interest rates will grow.
The council said 4.2 billion pounds (US$5.8 billion) in mortgage lending recorded in January was 13 percent less than a year earlier, which was also a remarkably quiet month for the mortgage market.
The fall in lending for home purchases was divided between first-time buyers and home movers.
First-time buyers accounted for 10,500 mortgages worth £1.2 billion during January, a drop of 28 percent in number and 29 percent in value from December.
Home movers fell by 29 percent in number and 28 percent in value from £4 billion to £2.9 billion for the same period. Remortgage loans were also down, although by only six percent, whereas the value fell by seven percent.
Michael Coogan of the CML said that it is too early for any conclusion regarding activity during the next couple of months as a result of the January statistics and stated that the market maintains steady lower levels of transactions.