Mortgage lending hit £140bn in 2011

Nia Williams

January 23, 2012

December’s figure represents a 12% drop from £13.2 billion in November but a 12% rise from December 2010 (£10.5 billion). December was the fifth month in a row of higher year-on-year lending.

Lending totalled an estimated £37.3 billion in the fourth quarter of last year, down from £39.2 billion in the previous quarter but 11% higher than the last three months of 2010 (£33.6 billion).

2011’s estimated total of £140 billion is slightly above the CML’s annual forecast of £138 billion. This was up 3% from £136 billion in 2010.

Commenting, CML chief economist Bob Pannell observed: “The closing months of 2011 saw stronger mortgage lending activity and housing transactions, despite the fact that short term economic prospects are challenging.

“There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year.

“But, continuing eurozone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

Dominic Hennessy, managing director of the mortgage brokers Just Us, said: “Despite a brief rally in November, the mortgage market ended 2011 with a whimper rather than a bang.

“For many in the industry, it was frankly a year best forgotten. Total lending was only a whisker better than it was in 2010.

“But the lenders cannot blame this solely on the gloomy economic picture. The mess is partly of their own making.

“Despite rock bottom interest rates making mortgages cheaper than they have been for years, lenders are still very choosy about who they will lend to.

“Anyone self-employed or with anything less than a flawless credit score isn’t even in the game.

“The size of deposit demanded by the lenders is still putting a mortgage beyond the reach of many would-be first time buyers.

“Demand is there, but it remains deeply fragile. Consumer confidence is extremely weak as people worry about losing their jobs.

“As consumer confidence continues to wallow in the post-Christmas gloom, things are unlikely to improve soon.”

Peter Rollings, CEO of estate agent Marsh & Parsons, is a bit more upbeat: “The consistent annual improvement in lending in the last few months should go some way towards dispelling the doom and gloom surrounding the current mortgage market,” he said.

“Although the eurozone crisis still lingers in the background, lenders are acclimatising to the difficult economic environment and improving their offering to borrowers nonetheless.

“While we don’t anticipate mortgage lending to return to anywhere near its pre-crunch peak level, we may see the wider national housing market moving in the same direction as London as the year progresses.”

Paul Hunt, managing director Phoebus Software, agrees: “The annual increase in gross lending isn’t large enough to indicate the market is returning to the levels seen a few years ago, but it’s very encouraging nonetheless.

“In the second half of 2011, the eurozone crisis and the resulting rise in LIBOR could have caused lenders to retreat into their shells to weather possible defaults in Greece and beyond. But in fact lenders have demonstrated they are prepared to support the property market in the UK as far as is possible.

“On a seasonally adjusted basis, gross lending rose in seven of the last eight months, which last happened in 2009.

“2012 will certainly offer major challenges to lenders hoping to expand their activities in the UK, but their efforts in the latter part of 2011 demonstrate they are well prepared to meet them.”


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