Mortgage lending down as rate rises bite

Posted: 19 Mar 2007 09:54:03 GMT

Mortgage lending in January was down 11 per cent on December figures following an unseasonably busy end to 2006, the Council of Mortgage Lenders (CML) has said

Mortgage lending in January was down 11 per cent on December figures following an unseasonably busy end to 2006, the Council of Mortgage Lenders (CML) has said.

The figures were still six per cent up on January 2006 however, despite rising interest rates deterring first-time buyers.

Concerns about long-term prospects for borrowing costs persuaded 70 per cent of mortgage applicants, and 85 per cent of first-time buyers, to opt for fixed rate deals.

Royal Institution of Chartered Surveyors economist Oliver Gilmartin said that new buyers were heeding warnings that the current interest rate cycle has not peaked.

"Mortgage borrowers are placing greater value on the security of fixed rate deals and have been further encouraged by the extra money in their pockets as interest rates on fixed rate deals have fallen below discounted mortgages in recent months," he said.

"However, the housing market will continue to slow gradually throughout the year as higher interest rates bite into the affordability levels of would be buyers."

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