This means the gross lending estimate for the fourth quarter of 2014 is £51.6 billion, down 8% on quarter three but up 1% on the fourth quarter of 2013.
Overall, for 2014 the gross lending estimate is £205.6 billion, up 17% on 2013's £176 billion gross lending figure.
CML chief economist Bob Pannell said:
"Housing market activity has been cooling and house price growth slowing in recent months, but 2014 was still the strongest year for mortgage lending since 2008. First-time buyers were a key driver, helped by government initiatives such as Help to Buy. As a result, the number of first-time buyers topped the 300,000 mark. While a far cry from the half million that we might regard as 'normal', this was the highest number of first-time buyers since 2007.
"Although lending remained muted in December, the previous monthly pace of decline in approvals appeared to moderate. So, alongside the big picture of a softer market, we are beginning to detect signs that underlying market conditions may be stabilising."
Brian Murphy, Head of Lending at Mortgage Advice Bureau, comments:
“Although subdued compared to Q3 2014, gross mortgage lending in Q4 exceeded lending figures for Q1 and almost matched those in Q2, despite the final months of the year traditionally being a quieter time in the mortgage market. This is particularly positive given the introduction of the Mortgage Market Review and additional tighter lending criteria in 2014, both of which had the potential to dampen lending considerably.
“Mortgage lending held steady in December and our data shows that total mortgage applications for the month were up 26% year-on-year. This high level of consumer demand shows no signs of slowing in 2015, as borrowers make the most of the fierce inter-lender competition that has brought mortgage rates down to historic lows. Recent changes to the stamp duty system also meant that the average homebuyer had an extra £1,300 in their pockets in December, an amount which could make all the difference for aspiring first-time buyers.
“With access to mortgage finance improving considerably over the past year, the market saw the highest number of first-time buyers enter the market since 2007. However, these numbers have still not recovered to the levels seen before the recession. Government and industry must maintain their commitment to improving access to homeownership while addressing the current imbalance between housing supply and demand which threatens to drive affordability down.”
Henry Woodcock, Principal Mortgage Consultant, IRESS, added:
“Activity didn’t grind to a halt in December but the usual seasonal lull certainly took place. However, the slowdown at the end of the year hardly marks an about turn, with the housing market moving at a more restrained, sedate pace in the second half of the 2014 as consumer sentiment softened somewhat.
“While we may not see the same red hot start to the year as we did in 2014, there are plenty of reasons to expect activity to bounce back. The prospect of an interest rate rise is looking all the more distant, while intensifying mortgage rate competition should stimulate buyer demand. Equally, we should start to see the impact of the stamp duty reforms filter through into activity as the year progresses. It remains to be seen what impact the EU Mortgage Credit Directive and the uncertainty of the General Election will have on the market, but the outlook remains broadly positive.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said:
"Although gross mortgage lending was unchanged in December compared with the previous month, 2014 turned out to be a good year overall for the mortgage market with lending estimated at £205.6 billion, up 17 per cent on the previous year’s £176bn. Subsequently, 2014 was the best year for mortgage lending since 2008 and while we expect the housing market to be more subdued over the next few months, we are still predicting lending in the region of £215bn for the year.
"While first-time buyers have been a key driver of the market last year, we expect the remortgaging market to be strong over the next 12 months with borrowers not so much fearing a rate rise but enticed by some of the astonishingly cheap deals now available.
"With this month’s minutes from the Monetary Policy Committee revealing that the Bank of England’s two hawks have dropped their calls for an interest rate rise, it seems unlikely that we will see rates go up this year, or even next. With inflation falling to 0.5 per cent in December, it’s lowest level in nearly 15 years, the pressure is off the rate setters to move rates.
"Lenders have already reacted to falling Swap rates with record low mortgage rates. With ten-year fixes now available from just 2.94 per cent, an exceptionally cheap deal for such certainty, more and more borrowers will be tempted to commit for the longer term. The next step is for lenders to start easing criteria rather than cutting rates, a move we hope to see this year."
