Mortgage lending tightened in January as buyers required to “jump through hoops”

Mortgage lending slumped in January. Image: PA

Mortgage lending slumped in January. Image: PA - Credit: PA Wire/Press Association Images

The amount of money lent to aspiring home buyers slumped in January, as new figures suggest that mortgage lenders approved £14.3 billion of new loans, down nearly £2 billion on the previous month.

Numbers released by the Council of Mortgage Lenders estimate that finance made available to prospective home buyers was down 14 per cent on the £16.6 billion approved in December last year.

Bob Pannell, chief economist of the Council of Mortgage Lenders said: “The softer pace of approvals through the second half of last year contributed to the relatively weak pace of mortgage lending in January.”

Mr Pannell also explained that the improving economic picture, with stronger earnings and employment meant that lending is likely to pick up over the coming months and reach an expected £222 billion by the end of 2015 as confidence improves.

John Morris, a partner of Day Morris Estate Agents in Highgate said the figures chime with his experience of tougher lending criteria for buyers as lenders seek to minimize risk.

He said: “The heavily guarded money mountains are still guarded and lenders want people to jump through hoops. They are prepared to lend to people with big jobs but there is less availability further down the scale.”

Mr Morris, who has been advising on property sales in Hampstead and Highgate since 1989 also said that although mortgage lending remains strict across the market, there have been very few reposessions in the area.

However, he added that sales in the area have also slowed as buyers in the market for prime property now face increased levels of stamp duty and a potential ‘Mansion Tax’ on properties over £2 million should Labour win the general election in May.

Whilst financial products such as the Government’s Help to Buy scheme have boosted lending to first-time buyers at the lower end of the market, Mr Morris said North London has seen increasingly strong demand for buy-to-let property in houses worth over £400,000.

He added:“It’s incredible, buy-to-let is stronger than ever as investors are looking to get a decent rate of return on their money whilst interest rates on savings are low.”