Mortgage lending stagnates in February

Data released today by the Council of Mortgage Lenders shows gross mortgage lending in February was an estimated £9.5bn, a figure almost identical to January’s gross lending of £9.475bn.

There is also little improvement year-on-year, as gross lending was £9.419bn in February 2010. This equates to an annual increase of less than 1%.

Mortgage lending is still weak and has struggled to increase over the latter half of 2010 and into 2011, while there has also been conflicting reports about moves in house prices.

According to the CML, “although there has been a seasonal pick-up in house purchase demand over recent weeks, this appears to be weaker than a year ago despite the fact that there was a lull at the start of 2010 following the expiry of the (earlier) stamp duty concession at the close of 2009”.

CML chief economist Bob Pannell said: “There is little in the latest batch of market data that would cause us to revise our market forecasts for 2011, and nothing that alters our underlying view that this is going to be a challenging year for households and the housing market.

“The housing market remains stuck in a rut and, while we do not anticipate much relief in next week’s Budget, it does present an opportunity for the chancellor to address the reform of stamp duty. What we have instead is the introduction of a new 5% band. That is an irrelevance for the majority of home-buyers but another indication of the haphazard and arbitrary nature of this tax, where reform is long overdue.”