The Council of Mortgage Lenders has warned against property market panic after revealing a slump to a record low in the number of loan approvals to homebuyers.
The value of mortgages agreed for home purchases slumped from £10.0 billion in December to £7.1 billion last month, the weakest figure since February 2002.
The number of loans was, at 63,000, down 26 per cent on the December total, the lowest since the CML began collecting records in 1998.
While the slump was blamed in part on seasonal factors, with January typically a poor month for mortgage companies, the council conceded that the rate of decrease also reflected the property market downturn.
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“These figures show beyond doubt the recent slowdown in the housing market,” Peter Williams, the CML deputy director, said.
However, he warned against making property market forecasts on the basis of one month’s figures.
“The picture this year is likely to be lumpy rather than smooth. The decline in lending levels is unlikely to be so marked as 2005 progresses.”
The market’s decline was also highlighted by data from the British Bankers’ Association showing lending up £4.4 billion last month compared with £5.1 billion in December.
David Dooks, the BBA director of statistics, said: “In the current state of housing market sentiment the relatively slower pattern of mortgage demand looks likely to continue on the early months of 2005.”