Mortgage lending rallies in December

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by Gill Montia

Gross mortgage lending of £9 billion in December was at its strongest for the whole of last year, according to the British Bankers’ Association, with the total up 12% on the same period of 2010.

However, repayments by homeowners remained high and net mortgage lending (gross lending with repayments and redemptions stripped out) stood at only £0.7 billion, compared with a previous six-month average of £0.8 billion.

Mortgage approvals for house purchases rose slightly compared with November, to 36,171, but for 2011 as a whole volumes showed no improvement on the previous two years.

At £145,200, December’s average house purchase value stood virtually unchanged year-on-year.

Earlier this week, the Council of Mortgage Lenders warned that mortgage market conditions for 2012 remain difficult to call, because of continuing eurozone problems and uncertain funding prospects for lenders.

However, news from the US yesterday should help mitigate fears over interest rate rises in the UK.

The Federal Reserve announced that economic conditions are likely to warrant “exceptionally low” levels for the federal funds rate, at least through to late 2014.

The central bank is aiming for rates of between 0% and 0.25%.