December mortgage lending sets new record

Friday, 20 January 2006 12:00 AM

Gross mortgage lending in December was the highest on record, according to mortgage lenders.

Although the amount lent through mortgages fell by six per cent in December from November, it was still 25 per cent higher than in December 2004.

The figures back up data from other house price surveys suggesting the housing market ended 2005 on an unseasonable high.

The Council of Mortgage Lenders' (CML) data shows that despite the downturn in the housing market in 2005 gross lending, at £287.5 billion, was down only one per cent on 2004's figure of £291.2 billion.

Data from a separate survey shows that the average mortgage value also rose during 2005, despite static house prices.

"The commentators who thought lending would fall sharply in 2005 based on the performance of the first half of the year were wrong," said Michael Coogan, director general of the CML.

"Confidence in the housing market was supported by the realisation that short-term interest rates had peaked and the downward trend in fixed-term rates throughout much of the year, resulting in stable house prices."

In other monthly surveys, the Royal Institution of Chartered Surveyors (RICS) recorded the largest increase in completed sales in the three months to December in over two years, while the National Association of Estate Agents said December 2005's sales figures were 33 per cent up on twelve months earlier.

Mr Coogan added: "The second half of 2005 was characterised by strengthening housing market activity and increased mortgage lending. We expect this trend to continue into 2006 as mortgage approvals continue to rise. Against this background, house prices should remain resilient in the coming months."

Moneyextra's monthly mortgage market monitor, published yesterday, shows that the average value of completed mortgages in December 2005 was £143,643.48, which is 14.74 per cent higher than 12 months earlier.

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