There were 18,700 loans advanced, worth £2.3 billion, up 7% by volume and 10% by value, from November. There was also an increase in the proportion of properties (from 50% to 53%) bought by first-time buyers within the price band currently exempt from stamp duty, making it likely they are beginning to rush through purchases before the concession ends in March.
Lending to movers, however, experienced a seasonal decrease in December from 29,300, worth £4.8 billion, in November to 28,700, worth £4.6 billion.
Overall, December saw an almost unchanged house purchase market from November. House purchasers took out 47,400 loans, worth £6.9 billion, a 1% increase in volume, with no change in the value, from the previous month and 7% up (8% in value) from December 2010.
The number of loans for remortgage, however, declined 15% (14% by value) from November but the 28,100 loans, worth £3.6 billion, taken out increased by 10% in volume (16% in value) from December 2010 following a low period for remortgaging.
It was a mixed picture for the mortgage market in 2011 as a whole. Remortgage lending increased by 17% from 2010 to £47 billion, while house purchase lending, at £75 billion, was 6% down on the previous year.
Within the house purchase market, lending to both first-time buyers and movers fell in 2011 but first time buyers fared slightly better. There were 193,000 loans, worth £23.4 billion, taken out by first-time buyers in 2011, down from 200,100 loans, worth £23.9 billion, in 2010 (a 4% fall by volume and 2% by value).
Movers took out 316,500 loans, worth £51.4 billion, last year, down from 343,200, worth £55.1 billion, in 2010 (down 8% by volume, 7% by value).
Paul Smee, CML director general, said:
“We have been expecting a flow of first-time buyers onto the market as the stamp duty exemption ends in March and December’s figures appear to show this has now begun.
“The market in 2011, while still subdued, saw a welcome increase in annual gross lending for the first time since 2007, when the financial crisis began. With the Eurozone problems still rumbling on however, we believe there is still a real risk that this year's lending levels will be lower than those seen in 2011.”
Jonathan Samuels, CEO, Dragonfly Property Finance, said:
"In such a tough market, it's no surprise that first time buyers are using every single support that's out there. The stamp duty exemption is a rare positive in what will often be perceived as a sea of negatives.
"The mortgage market generally remains flat and this is likely to continue given the uncertainty surrounding our own economy and that of the Eurozone. For many people, 2012 will be a year of sitting on hands.
"It was no real surprise that remortgages dropped by 15% in December, as a deterioration in the economy made a rise in interest rates seem even more distant."
Liza-Jane Kelly, Sales Director of estate agent Marsh & Parsons, comments:
“The rush to beat the end of the stamp duty holiday has been a key force behind the latest surge in lending, but it should not mask the steady improvement in the mortgage market in the past few months. The number of higher loan-to-value mortgage deals is slowly increasing – and while criteria still remains a problem, first-time buyer demand for finance is by no means dead and buried.
"With rents rising, and average mortgage rates so low, many see now as the ideal opportunity to get onto the property ladder. A healthy lower tier is crucial to the overall wellbeing of the housing market, with new buyers helping to unlock property chains. As things stand, the government should be doing all it can to support the fragile first-time buyer market – rather than re-imposing the financial barrier of stamp duty for many buyers looking move after March.”
