Mortgage lending shows strong growth

Mortgage lending was strong at the end of 2005, according to the latest figures from the Council of Mortgage Lenders.

The CML said that an estimated £26.3 billion was lent to borrowers in December, a 25% increase on figures from the same month in 2004.

Lending typically falls towards the end of the year, but the CML said that the 6% fall in December was less than in previous years.

CML Director General Michael Coogan said: "The commentators who thought lending would fall sharply in 2005 based on the performance of the first half of the year were wrong. Confidence in the housing market was supported by the realisation that short-term interest rates had peaked and the downward trend in fixed-term rates throughout much of the year, resulting in stable house prices.

"The second half of 2005 was characterised by strengthening housing market activity and increased mortgage lending. We expect this trend to continue into 2006 as mortgage approvals continue to rise. Against this background, house prices should remain resilient in the coming months."

The British Bankers Association also reported that net mortgage lending rose by £5.4 billion in December - the strongest rise since June 2004.

David Dooks, BBA director of statistics, said: "Mortgage lending strengthened in the final months of the year, but in sharp contrast, unsecured lending continued to be noticeably subdued."

Commenting on the figures, Duncan Pownall, spokesman for Bradford & Bingley, said: "Strength in the housing market combined with buyer realisation that prices will not significantly fall has encouraged more and more people to step onto the property ladder.

"Over the coming year we anticipate increased activity in the first time buyer market in particular."

(KMcA)