Mortgage lending up 11% in January

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by Kay Murchie

According to figures from the Council of Mortgage Lenders (CML), mortgage lending in the UK economy rose by 11% last month in spite of fears of a slowing housing market.

The figures showed that lending increased to £26.5 billion from £23.9 billion in December, however, this was still lower than most months in 2007. The CML said this represents a strong performance for the month.

However, the CML warned gross lending volumes were expected to be lower in the next few months, following a drop in mortgage approvals towards the end of 2007.

Michael Coogan of the CML said gross lending held up well in January. However, there is considerable uncertainty in the housing market at the moment and we expect lending volumes to be lower in the coming months.

Mr Coogan added that it is likely demand will be stronger for re-mortgaging than for house purchase in the short term.

However, according to some analysts, the figures cannot be interpreted in too positive a light.

Howard Archer, of Global Insight, said it is really mortgage approvals that are more important as a leading indicator of where the housing market is headed and latest available data show that these were very weak in December.