January mortgage lending hits 9-year high

MORTGAGE lending last month rose by 1.8 per cent year-on-year to £19.8bn, hitting its highest level for January since 2008.

The Council of Mortgage Lenders, who released the figures, said that overall mortgage lending continues to hold up well, but warned of a “twin-track market” in the UK.

“Weakness in buy-to-let and home movers has been offset by an increase in first-time buyers and re-mortgage lending,” said the trade body.

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Activity dropped by 5.6 per cent month-on-month, which economists attributed to a seasonal dip in mortgage lending.

“Mortgage lending levels reached an eight-year high at the end of 2016, so we were always likely to see the pace of growth slow slightly in January,” said John Goodall, chief executive and co-founder of peer-to-peer lender Landbay, which specialises in buy-to-let mortgages.

“Still, borrowers continue to take advantage of record low interest rates, and a growing number of loan-to-value deals, both of which are helping keep the market buoyant despite a number of economic and regulatory headwinds.

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“The year ahead could see a continuation of this trend, as changes to buy-to-let tax relief and the introduction of tighter underwriting standards make it more difficult or more complicated for aspiring homeowners and landlords to access the finance they need.”

Weakening consumer confidence and Brexit-induced uncertainty are likely to weigh on housing market activity this year, warned Howard Archer, chief European and UK economist at research firm IHS Global Insight.

“The weakening and uncertain outlook for the economy could very well make mortgage lenders tighten their lending standards and possibly even look to increase their margins on mortgages,” he added. 

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