Mortgage lending down 29% in January
Friday, 11 March 2011 12:16 PM
The number of mortgage approvals in January was significantly lower than at the same time last year, as rising inflation and tax hikes added yet more pressure to household budgeting.
According to new figures from the Council of Mortgage Lenders (CML), only 28,500 home loans were approved in the first 30 days of 2011, the lowest level since February 2009.
The group suggested that the latest drop in lending was too significant to be attributed to seasonal factors alone, suggesting that government spending cuts and rising living costs were more likely to blame.
"With the effects of last year's government spending cuts beginning to bite, and rising inflation and tax measures putting pressure on household budgets, potential house buyers are likely to have been discouraged," it explained.
Michael Coogan, director general at the CML, said that the weak performance has been expected and suggested that housing activity was likely to remain slow for the year ahead.
"Pressures on household budgets have been increasing both in terms of take-home pay, and indirect tax measures such as the VAT increase and recent inflationary pressures, so we were expecting a fall in transactions early in the year, and a flat mortgage market underpins our forecasts for 2011.
"The bad winter weather and uncertainty over interest rate rises will have exacerbated the fall in lending in January, so it would be premature to draw any firm conclusions about activity levels over the next few months. The market remains stable at low levels of transactions," Coogan said.
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