Mortgage lending slumped to an eight-and-a-half-year low during January as the housing market suffered a lull following the end of the Government"s stamp duty holiday.
The major banks advanced just 8billion during the month, 26 per cent down on December"s figure and the lowest level since May 2001, according to the British Bankers" Association.
The group blamed the fall on a combination of people rushing through purchases during December to beat the end of the stamp duty holiday, and the wintry weather during January hitting market activity.
Stamp-ede: Buyers took advantage of the stamp duty threshold falling from 175,000back to 125,000
Lending had been unusually strong during December, with advancestotalling 11billion, the highest figure for more than a year, duringwhat is traditionally a quiet month for the housing market.
The rise was attributed to people buying lower value homes pushingthrough purchases before the stamp duty threshold fell from 175,000back to 125,000 at the beginning of this year.
The figures are in line with data reported by the Council ofMortgage Lenders for January, which showed that total lending hadfallen to a 10-year low of 9billion.David Dooks, BBA statistics director, said: "It was no surprise to seethe January mortgage figures falling back from December, whentransactions were being pushed through to beat the end of the stampduty relief.
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"There was a natural reaction in the January figures and the bad weather further suppressed market activity."
The BBA figures also suggested that lending is likely to remainsubdued during the first quarter of this year, with the number ofmortgages approved for house purchase falling to its lowest level foreight months of 35,083.
The figure is 23 per cent down on the level reported for December, which had been the highest for 26 months.
Loans in the pipeline for people remortgaging also dived to a10-year low of 20,252 during January, while the number of people takingout buy-to-let mortgages or releasing equity from their property fellto its lowest level since records began in September 1997.
Howard Archer, chief UK and European economist at IHS GlobalInsight, said: "January"s marked relapse in mortgage approvals wasundoubtedly the consequence of both the very bad weather and someactivity having been brought forward to late-2009 to beat the pricethreshold for stamp duty on house purchases moving back down from175,000 to 125,000 at the start of January.
"The marked relapse in mortgage activity in January reinforces oursuspicion that house prices are likely to suffer a correction at somepoint in 2010 and they will be essentially only flat over the year."
Unsecured lending remained subdued during January as the bad weatherput people off shopping, while demand was also lower followingChristmas.
People spent 5.6billion on their credit cards during the month but,once repayments of 6billion were taken into account, outstanding debtrose by 261million due to interest and charges.
Borrowing through personal loans and overdrafts contracted for the14th consecutive month with people repaying 334million more than theywere lent in January.
Savings levels also held up well, with people increasing theirdeposits by 2.5billion, down on the previous month"s figure butbroadly in line with the recent six-month average.
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