Mortgage lending lift in January

The CML expects lending volumes to fall in the coming months

Gross mortgage lending rose in January despite an unsettled housing market, according to the Council for Mortgage Lenders (CML).

The CML said lending increased to an estimated £26.5bn in January, up 11% from £23.9bn in December, but still lower than most months in 2007.

The CML said it expected lower lending volumes in the coming months, driven mainly by remortgaging.

The figures come after a series of surveys showed stalling house prices.

The CML said that lending was typically lower in January than in December.

But figures showed a rise from gross lending in December, which had been 25% lower than November and was the lowest monthly figure since May 2005.

Yet the CML warned gross lending volumes were expected to be lower in the coming months, following a fall in mortgage approvals towards the end of last year.

'Considerable uncertainty'

"Gross lending held up well in January. However, there is considerable uncertainty in the housing market at the moment and we expect lending volumes to be lower in the coming months," said CML director general Michael Coogan.

He said demand would be stronger for remortgaging than for house purchases in the short term.

"Home buyers might be more inclined to transact if their moving costs were reduced and the government has the opportunity to address this by raising stamp duty thresholds and cutting the rates of stamp duty in next month's Budget," he added.

The January figures were very similar to the same month last year when gross lending was £26.6bn.

Cooling market

The Bank of England's Monetary Policy Committee (MPC) cut interest rates from 5.5% to 5.25% at its February meeting, following a 0.25% drop in December.

The housing market has stalled, according to recent surveys

Kate Barker, a member of the MPC, warned in a speech this week that a downward spiral of house prices and a drop in mortgage lending were the biggest short-term threats to the economy.

Recent surveys had suggested that the increase in house prices was stalling.

The Royal Institution of Chartered Surveyors (Rics) said the number of UK surveyors reporting house price falls grew for the sixth consecutive month in January - a trend not seen since the housing recession of the early 1990s.

January figures from the Halifax bank and the Nationwide Building Society signalled falls in annual house price inflation.

The Halifax, the UK's biggest mortgage lender, said annual house price inflation was 4.5% in January, down from the previous month's figure of 5.2%.

Nationwide said the annual rate of price growth dropped to 4.2% in January, which was the lowest rate since December 2005.