Mortgage lending hits year lows

The market welcomed more first time buyers

Mortgage lending in the UK dropped to its lowest level in almost a year in February, figures show.

The Council of Mortgage Lenders (CML) said a total of £20.1bn was advanced during the month, down 6.5% on January.

A £1bn drop in remortaging - which fell to a year low of £8.3bn - was behind most of the fall, the CML explained.

Lending to property buyers also dipped £200m to £9.8bn, but the CML said it was too early to say if this signalled that consumer debt was cooling.

The CML said the February drop was not a surprise as it merely followed previous seasonal patterns.

However, the total mortgage lending figure was still up 15% on February last year, it added.

Lending 'to ease'

More people were also trying to get onto the property ladder in February, as both the number and the proportion of loans of first time buyers were up on last month, the survey said.

But the CML's director general, Michael Coogan, did warn that he expected lending to moderate as 2004 progresses.

He said: "There is no obvious sign of any let-up in affordability problems, but at least yesterday's budget avoided imposing any new or increased taxes on home-buyers."

The latest figures from the British Banker's Association backed up Mr Coogan's claims.

The group said net lending, which strips out redemptions and repayments, by major banks was £5.45bn in February, down from January's £5.85bn high.