Mortgage lending increased by 14% in December with the “surprisingly strong” data driven by a surge in house purchase completions, according to CML figures.
Gross mortgage lending reached an estimated £13.7bn last month which is an increase of 14% from November’s figure of £12.1bn and up 3% on December 2008.
Lending totalled £39.1bn in the fourth quarter, up slightly from £39bn in Q3, but a fall of 14% on the last three months of 2008.
These figures represent the first time the annual monthly comparison has been in positive territory since October 2007. However, apart from 2008, it is still the lowest figure for December since 2001.
With a normal fall of 6%, between the third and fourth quarter, the month’s figures defy seasonal trends.
“The December figure is surprisingly strong as there is typically a slight decline in the month,” CML economist Paul Samter says. “Evidence suggests the rise was down to a surge in house purchase completions – as remortgaging still remains exceptionally weak.
“The most likely cause is that buyers of cheaper property wanted to complete their transactions prior to the year end to beat the end of the stamp duty holiday.”
The healthy data comes, however, as Skipton Building Society announced it will raise its standard variable rate from 3.5% to 4.95% on 1 March 2010.
According to Brian Murphy, head of lending at Mortgage Advice Bureau, this could be just the beginning.
“What concerns me is that many borrowers are banking on rates staying put for at least another year,” he says.
“But developments such as this week’s higher than expected inflation figures and lower than expected unemployment figures could possibly see rates rise sooner rather than later.”