Although lending remains weak overall, stronger remortgage activity has continued into the early months of 2011.
While there has been a seasonal pick-up in house purchase demand over recent weeks, this appears to be weaker than a year ago despite the fact that there was a lull at the start of 2010 following the expiry of the (earlier) stamp duty concession at the close of 2009.
CML chief economist Bob Pannell said: "There is little in the latest batch of market data that would cause us to revise our market forecasts for 2011, and nothing that alters our underlying view that this is going to be a challenging year for households and the housing market.
"The housing market remains stuck in a rut and, while we do not anticipate much relief in next week’s Budget, it does present an opportunity for the Chancellor to address the reform of stamp duty. What we have instead is the introduction of a new 5% band. That is an irrelevance for the majority of home-buyers but another indication of the haphazard and arbitrary nature of this tax, where reform is long overdue."
Commenting on the figures, Stuart Law of Assetz, said: "Levels of lending in January were uncharacteristically low so it is encouraging to see that this figure is now beginning to pick up again.
"We are likely to see lending levels increase throughout the year as banks and building societies compete and more products become available.
"A number of shared equity schemes and high LTV products for first-time buyers have already launched this year which will begin to feed into these statistics over the next few months. Assetz will also be launching its own ‘top up’ fund for first-time buyers very soon.
"There is also likely to be some nervousness surrounding changes to income tax payments next month. Buyers may be waiting to see the impact of this on their net income before committing to moving or remortgaging."
John Mawdsley, chief executive officer of Omnii Solutions, said: "Given the sense of malaise surrounding the economy, lenders have actually shown surprising resilience. With inflation well above target, and the spectre of interest rate rises continuing to prey on the minds of intermediaries and borrowers alike, it shows the lending market is operating from a solid, if suppressed, base.
"There is some light at the end of the tunnel. Remortgaging is at a consistently high level as homeowners jostle to remortgage ahead of the widely predicted rate rises. [Next week’s] Budget is unlikely to provide much cause for cheer, but I expect to see lending increase in the coming months as the direction of the economy becomes more apparent."
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