CML sees modest recovery

January was extremely weak due to one-off factors such as the effect of the end of the stamp-duty exemption in December 2009 and the severe winter weather. So the 35,000 loans advanced (worth £5 billion) signifies a modest recovery, although they were up by 49% in volume and by 67% in value from a year earlier.

The end of the stamp duty holiday in December meant there were fewer first-time buyers in January. As a result their numbers rose slightly faster than the rest of the market in February with 12,600 loans advanced (worth £1.5 billion), up 13% by number and 15% by value on January.

Home mover activity, which was less affected by the stamp duty holiday of 2008 and 2009, did not see as much of a rebound. The number of transactions were still higher with 22,600 loans advanced, (worth £3.5 billion), up 11% by number and 6% by value on January.

Remortgaging activity remains weak, although the 24,000 loans in February was up 2%, representing an increase for the first time in five months. This weakness in remortgaging is expected to continue for some time yet.

With interest rates at an historic low, fixed rate mortgages remain less popular than in the recent past. The proportion of fixed rate mortgages was 47% in February 2010, unchanged from January and the lowest share in around five years. The share of tracker products in February was 36%, again unchanged from January, but remained at its highest level since the CML began recording this data in March 2005.

Commenting on the data, CML head of research Bob Pannell said: "With the supply of credit still tight and the upcoming election causing political uncertainty, we are unlikely to see much change in the near future although the new stamp duty exemption for first-time buyers could boost the market somewhat and we hope to see the traditional seasonal pick-up as the weather gets warmer and the days get longer.

"The start of the year is traditionally a quiet period for mortgage lending. This year though, transactions have been affected by the ending of 2009's stamp duty concession and the harsh weather, making it hard to identify clear trends in recent months."