The latest figures released by Britain’s Council of Mortgage Lenders show that  property lending in Britain in January was more than one-fifth lower as compared to the same period at the same time last year, with loans also falling to a decade-low figure. Total gross lending dropped to £9.1 billion in January, which represents a 32% drop from the figures seen in December 2009, and the figures were also 21% lower than the figures seen in January last year. At the same time, lending levels fell to their lowest point seen since the beginning of the new century.

According to the Bank of England in a separate release, lenders have also reported that Britain’s extreme weather conditions towards the end period of 2009 and the beginning of 2010 had helped to lower mortgage approval levels in January. The CML stated that the larger than usual fall between the months of December 2009 and January 2009 confirmed that house buying activity was helped during December by a wave of borrowers looking to push their purchase through to beat the end of the stamp duty holiday.

The CML’s figures also revealed that there had been a 56% hike in mortgage advances for those properties affected by the changes to stamp duty in December 2009, a figure far higher than the 11% rise seen by the rest of the property market. The CML has predicted that the early period of 2010 is likely to witness a drop in activity levels due to the fact that more mortgage deals were concluded during the final period of 2009, as well as the uncertainty created by the coming British General Election in the Spring.

Paul Samter, an economist at the Council, added that the rather turgid recovery as well as debt market uncertainties probably meant that the housing market could only really expect a gradual recovery. Due to the fact that the banks will have to refinance around £300 billion of wholesale funding  next year it is thought likely that funding costs will rise which could have the effect of curtailing lending to businesses seeking commercial mortgages and households looking for new or re-mortgages.