Mortgage lending 'flat' in February

Lending on mortgages remained "flat" in February, with the number of mortgages for homebuyers at the lowest level since May 2003, according to figures released today.

The Council of Mortgage Lenders (CML) said its latest data showed that total gross lending in February remained at ?17.2bn, virtually the same as January's level of ?17.3bn, but 18% lower than the ?21.1bn in February last year.

However, the organisation said this came as no surprise, as mortgage lending traditionally falls every year in January and February.

However, it said both lending for house purchase and remortgaging decreased marginally during the month. The CML said lending for house purchases last month made up only 39% of total mortgage lending while remortgaging accounted for 49% of all loans.

"This is the lowest proportion since May 2003 and the second lowest monthly figure on record," the CML said. It said the number of loans for house purchase also fell during the month by 3% to just 59,000 in February from 63,000 in January, the lowest monthly figure since it began recording the data in 1998.

The British Building Societies Association, which also published its lending figures today, said the property market had got off to a "quiet start" in 2005, with building society gross advances down from ?3.4bn in February 2004 to ?2.79bn last month.

Brian Morris, head of savings at the BSA, said: "These figures show the slowdown in the housing market is continuing, confirming expectations of a quiet start to 2005. A slight pick up is expected, but we are not likely to see lending levels as high as in the last two years."

Mr Morris added that the chancellor's decision to increase the lowest stamp duty threshold from ?60,000 to ?120,000 would help buyers, particularly those purchasing their first property, but said it was unlikely to have a large impact on lending.

Meanwhile, figures published today by the British Bankers' Association showed that mortgage lending by banks had risen by slightly more than expected last month. The data showed that net mortgage lending in February increased by ?4.8bn.

The figure was some ?600m stronger than January's revised level of ?4.2bn and ?300m more than the average increase of ?4.5bn over the previous six months.

David Dooks, director of statistics at the BBA, said February's mortgage lending was slightly higher than expected, despite low approvals in January, but added that consumer borrowing, particularly on credit cards, has been subdued.

The BBA said last month that although the data showed net mortgage lending in January rising by ?4.4bn, that was some ?800m lower than December's underlying rise of ?5.1bn.