Gross lending fell 4% in November with further figures expecting to reveal a slowdown in the housing market until at least the Spring 2005.
Figures from the Council of Mortgage Lenders revealed gross lending in November stood at £22.3bn, in comparison with £23.2bn in October and £25.5bn in November 2003.
Remortgaging has remained bullish, as lower lending for house purchase forced a decline in gross lending.
Loans for house purchase dropped from £10.3bn in October to £9.3bn last month, meanwhile house purchase represented 42% of mortgage lending in November, its lowest figure since May 2003.
Remortgaging grew to £10.6bn in November, compared to £10.2bn in October, according to CML.
The figure for loans on house purchase decreased 6,000 from the 91,000 recorded in October, representing a year-on-year fall of 25% from the 113,000 figure recorded in November 2003.
CML adds the number of mortgage approvals in November suggests the decline in lending is likely to continue into the new year.
CML director general, Michael Coogan says such a positive market for the first half of the year will lead to the amount of transactions in 2004 reaching a 15-year high, adding with January and February being traditionally weaker lending months, a slowdown is likely until Spring.
“What is apparent is a picture of a slowing market, but one that should remain stable as we return to more normal volumes of lending over 2005 as a whole,” he says.
Meanwhile, figures from the British Banking Association found lending to the UK private sector increased 1.1% or £11bn to £1,064.7bn. This was slightly higher than October' figure of £10.7bn.
Underlying net mortgage lending increased by £4bn, representing the lowest seasonally adjusted monthly flow since January 2002, while credit card borrowing (+£0.2bn) was unexpectedly lower than recent performances.
David Dooks, BBA director of statistics, says: “Mortgage lending continued to weaken in November, in line with recent approvals data. Within consumer credit, credit card borrowing was fairly weak despite stronger than expected retail sales figures.”IFAonline
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