Mortgage lending reached £219bn in 2002

Mortgage lending totalled £219bn in 2002, based on figures released yesterday by the Council of Mortgage Lenders.

Over the year, remortgaging accounted for 38% of all lending at £83.6bn, the highest figure on record.

Lending in December reached £19.5bn, showing no sign of any seasonal slowdown. Remortgaging remained strong in December, accounting for 39% of the total. Lending for house purchase totalled £10.6bn for the third consecutive month, accounting for 54% of the total.

On the basis of these figures, the CML expects to see strong lending continuing well into the spring, but continues to predict a slowdown in growth later in the year.

Average affordability remains positive. First-time buyers are continuing to put down at least a 20% deposit on average, while movers are typically putting down deposits of at least a third of the value of their property. First-time buyers borrowed an average of 2.58 X income in December, while the equivalent figure for movers was 2.36.

Fixed rates swung back into popularity in December, accounting for 38% of all lending – the highest proportion since last January. This may be because people are beginning to factor in an expectation that the next move in interest rates will be up.

CML director general Michael Coogan says: “As expected, 2002 proved to be the strongest year ever for mortgage lending. The conditions are in place for a soft landing for the housing market in 2003, but the market is not risk-free. We would urge borrowers to try to avoid borrowing up to the maximum limits, and to put down a reasonable deposit, if possible. This will reduce the risk of borrowers over-stretching themselves in a market where the future is uncertain.”