Gross mortgage lending up 12.5% year-on-year

26 January 2010 | By Natalie Thomas

The figures from the British Bankers’ Association show gross mortgage lending rose 12.5% compared to December 2008.

The BBA attributes the rise to people wanting to snap up properties before the end of the Stamp Duty holiday on 1 January.

Net mortgage lending stood at £3.5bn in December 2009, up from £3.4bn the previous month, and representing an annual growth of 4.6%.

Overall mortgage approvals in 2009 were 980,000. This was some 27% lower then 2008 and the lowest since the BBA data was available in September 1997.

Remortgaging was 20% down on 2008, which the BBA blames on borrowers moving onto their SVRs.

David Dooks, statistics director at the BBA, says: “The high street banks continued to lend substantial amounts in the weaker mortgage market of 2009 approving more than 440,000 loans for house purchase.

“Their share of gross lending went up from a historical level of about two-thirds to three-quarters, due to specialist lenders largely withdrawing from the market and building society finance contracting.

“Households’ unsecured borrowing contracted throughout the year, particularly on personal loans. After paying down debt, people sought to build up their savings.”

Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, says: “Historically, we would see a drop off in mortgage purchases in December, but with the Stamp Duty holiday expiring at the end of the year, this has led inevitably to a lot of rushed-through house purchases to qualify for the extended zero band Stamp Duty threshold.

“What we are likely to see in January and February, is an unusually large drop off in mortgage purchases, because sales which would normally have been concluded in the first two months of this year have been pushed through in December to beat the Stamp Duty holiday deadline.”

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