A 25% drop in first-time buyer mortgages in January has been dismissed by industry commentators as a seasonal dip.
Latest figures from the Council of Mortgage Lenders show 35,600 loans worth £5.3bn were taken out for house purchases in January – a fall of 25% by volume and 24% by value compared with December 2011.
But the figures are up 22% by volume and 23% by value from January 2011.
January 2012 also saw a drop in both the number and value of loans taken out for remortgages. Some 26,600 loans worth £3.6bn were taken out, down from 28,200 worth £3.5bn in December.
This was also 13% lower in number and 5% lower in value compared with January 2011 – the first year-on-year fall in remortgage business since the end of 2010.
But Paul Smee, director-general of the CML, says: “We traditionally see a substantial fall in lending at the start of the year, reflecting the lack of enthusiasm by buyers to move house during post-Christmas months and this January has been no exception.
“But the year-on-year rise in purchase lending suggests lending levels are generally rising although we expect the trajectory to be bumpy rather than smooth this year.”
Paul Hunt, managing director of Phoebus Software, says the fall in first-time buyer lending might seem worrying, but the real story lies in the sizeable annual rise.
He says: “Monthly data is dictated by seasonal changes so buyers and anyone interested in the health of the housing and mortgage markets must take great encouragement from these figures.”