Dramatic drop in number and value of loans blamed on December sales surge

The number of loans for house purchase fell in by half in January according to the latest data from bank lenders.

The Council of Mortgage Lenders said the number of home loans was down 49% on the previous month to 32,000, with the value of loans also down by 45% to £4.7bn.

However, the CML cautioned that the figures, which still represent large increases on January 2009, were affected by the surge in sales in December because of the end of the stamp duty holiday, and the bad January weather.

The number of loans for first-time buyers dropped even more, with 54% fewer loans.

Michael Coogan, director general of the CML, said lending volumes in January were low because of the end of the stamp duty holiday distorting December's figures. He said: “When December and January data are taken together, they show little change in underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier. We expect lending over the coming months to remain weak as uncertainty over of the state of the economy and the upcoming election are likely to continue to hold back housing market activity.”