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CML January figures provoke mixed reactions

Friday 19th February 2010

The latest Council of Mortgage Lender (CML) lending figures for january out yesterday showed the biggest lending slump since 2000 with a 32 per cent drop.

David Whittaker, managing director of Mortgages for Business, said: “These figures aren’t the end of the world. January’s arctic conditions and the vacuum left after the end of the stamp duty holiday meant lending took more of a hit than it usually would at this time of year. The market is in much better shape than the figures suggest. New mortgage products are coming onto the market everyday to cater for demand so expect lending in February and March to be much healthier.”

However, Nick Hopkinson, director of Property Portfolio Rescue (PPR), said the mortgage market was currently effectively closed to all but the richest and most credit worthy borrowers.

“While the number of mortgages available has increased over the last few months, costs and interest charges have also increased significantly, even though base interest rates remain at 0.5 per cent. It is clear from the lending data that the banks are still desperately trying to boost margins, repair their balance sheets and hide undisclosed losses,” he said.

He continued that with the suspension of QE, inflation is already rising above trend, household incomes remain under severe pressure, further tax rises are pending and major public sector cuts are inevitable after the election.

“Against this backdrop, I fear we will see house prices come under further pressure and, if the Government fails to intervene, 50,000 plus repossessions are likely this year,” he said.

However, Paul Hunt, managing director of Phoebus Software, was far more hopeful for the coming year, adding that the snow had also impacted the figures in January alongside the end of the Stamp Duty holiday.

“We fully expect lending figures to pick up significantly with rates remaining low and unemployment having fallen. But there may be a dip at election time when people hold back and wait for any legislative changes before entering the market,” he said.

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