CML news & views

A rush to complete transactions before the end of the stamp duty holiday boosted lending in December, our data showed. The number of loans to first-time buyers during the month was at its highest for two years, with a high concentration of purchases priced between £125,000 and £175,000.

December’s total of 24,900 loans to first-time buyers – the highest since November 2007 – is likely to mean that lending will remain subdued in the early months of 2010. At £2.9 billion, lending to first-time buyers in December was 26% higher than in the preceding month.

During the month, 55% of house purchase loans were on properties costing less than £175,000 and therefore exempt from stamp duty. Mortgages funded 21,500 purchases between £125,000 and £175,000, 56% more than in November. Stamp duty would have added a further 1% to the cost for these buyers if their transactions had been completed in January.

The numbers boosted house purchase lending overall, with 63,000 loans worth £8.5 billion in December, up from 51,000 (worth £7.1 billion) in November and 33,000 (worth £4.4 billion) in December 2008. 

Remortgaging, however, remained flat. The total number of loans, at 28,000, was the same as in November, although the value of this lending declined from £3.5 billion to £3.4 billion.

A depressed market in the early months of 2009 meant that the year overall was weak. Lending in 2009 totalled £143.6 billion, 43% lower than 2008’s total of £254.1 billion and 63% lower than the record £362.6 billion lent in 2007.

House purchase loans in 2009 nudged up to 517,000 from 516,000 in 2008. But that was only around half the total of 1,015,000 recorded in 2007. First-time buyer loans accounted for 198,000 of these, up slightly from 194,000 in 2008 but down 44% from 357,000 in 2007.