Uncertainty ahead of the general election is “dampening” lending, although the Council of Mortgage Lenders predicts an upswing once the result is known.
Figures from the trade body show house purchase lending fell by 12.8 per cent year-on-year, from £7.8bn in February 2014 to £6.8bn this February.
By volume, the number of loans fell by 16 per cent to 40,600.
Remortgage lending continued its slump, with the amount lent falling by 11 per cent year-on-year, from £3.7bn to £3.3bn. The number of loans fell by 14 per cent over the same period, from 24,900 in February 2014 to 21,500 this year.
While house purchase and remortgage lending were down, buy-to-let lending rose by 16 per cent year-on-year to £2.2bn. Around 15,900 loans were advanced to landlords in February, up 11 per cent year-on-year.
CML director general Paul Smee says: “As with January, seasonal factors have played their part in dampening house purchase lending activity in February.
“This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.
“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging, which is typically strong in the buy-to-let market.”
SPF Private Clients chief executive Mark Harris says that, while lending was down in February, activity started to pick up again in March.
He adds: “Once election uncertainty is out of the way, we expect to see a flurry of activity in the mortgage market. There will certainly be plenty of cheap mortgage rates to tempt buyers.
“Lenders have lots of capacity to lend and, if lending levels have been subdued at the beginning of the year, they will have plenty of ground to make up.”