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Council of Mortgage Lenders: Mortgage lending at all time high, but things could trail off in 2007

13 February 2007
Gross mortgage lending for December 2006 was the highest on record for the month, according to figures from the Council of Mortgage Lenders (CML).

Despite a 14% drop from November's all-time high of £33.2billion, the figure was still a massive £28.6 billion – they highest ever recorded for December. First time buyers accounted for 36% of all mortgages – up by 1% from 2005 - and there was an 11% increase in the number of mortgages for people moving house.

But the data also showed that first time buyers were being stretched more than ever, having to pay 3.31 times their salaries for their homes, with nearly 18% of their incomes going on mortgage payments. And most were caught out by stamp duty - only 41% of first-time buyer mortgages were on properties below the £125,000 stamp duty threshold - down from 44% in October and November, and down from around 50% from when the new threshold was set.

And the rising house prices and general worsening affordability of first time buyers and other home owners meant fixed rate deals remained popular throughout the year, with two thirds of all of those buying or remortgaging in 2006 choosing a fixed rate deal, up from 50% in 2005.

CML Director General Michael Coogan said: "The monthly figures clearly show the cumulative effects of the gradual worsening in affordability for first-time buyers - and the ever-rising proportion of them who are caught by stamp duty.

"Although the mortgage market performed extremely well in 2006, the effect of rising interest rates and the continuing decline in affordability are likely to dampen activity somewhat in 2007."

Find out more about first time buyer mortgages and fixed rate mortgage deals