Is debt stress putting a damper on mortgage lending?

The UK housing market saw a dramatic decline in mortgage lending in January, according to the Council of Mortgage Lenders.

Whilst debt solutions expert Atlantic believes the worry of debts could be putting a dampner on the housing market, lenders have described the drop in home-buying as a hangover from the rush to complete deals before the stamp duty holiday ended – at the end of last year.

The Council of Mortgage Lenders have reported that gross lending for home loans fell by 32 per cent in January compared with December – to £9.1bn.

But as Atlantic highlighted there could be more to the drop than the rush to buy homes before the end of 2009 – the figure was 21 per cent lower than January 2009. And in fact, is the lowest monthly total since February 2000.

Council of Mortgage Lenders (CML) economist Paul Samter says "the Bank of England is likely to keep rates low", which should go some way to dealing with mortgage payment problems and "help cushion borrowers from the worst of the recession."

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