December mortgage lending sets new record

Gross mortgage lending set a new December record last month of £29.4 billion, in spite of the climate of rising interest rates.

Although lending was down by 11 per cent on November's figure, the total amount borrowed was eight per cent higher than in the same month in 2005, according to new data from the Council of Mortgage Lenders (CML).

December is usually a quiet month for house price purchases so such a strong performance appears to be indicative of rampant demand, which is continuously pushing prices up.

Taking the year as a whole, it is obvious that 2006 was a buoyant 12 months for the UK housing market. Lending totalled a record £346 billion, a fifth higher than a year ago.

The CML said in a statement: "Although remortgaging grew by around six per cent in 2006, lending growth was driven mainly by house price inflation of around seven per cent and a rise in the number of property transactions.

"It has been obvious for months that those predicting a housing market crash last year were wrong. As we move into 2007, the market remains in good shape and expectations for the rest of the year and beyond are good."

However, pressure is intensifying for first time buyers. The CML found that the average novice to the property market was borrowing 3.29 times their income in November, up from 3.08 12 months previously.