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21 January 2011
Last updated at 05:18 ET
The total amount of mortgages advanced in December fell by 6% compared with the previous month, lenders say.
The £11bn advanced in December was also 18% lower than the same month a year earlier, when some buyers were beating the end of the stamp duty holiday.
The data, from the Council of Mortgage Lenders (CML), is the latest evidence of dampened demand from buyers at the end of 2010.
The CML added that some home loans had been increasing in cost recently.
The figures reveal that during 2010 as a whole, mortgage lending totalled £136.3bn, which was down 5% from £143.3bn in 2009 and the lowest annual total for a decade.
Arrears The CML has previously predicted that the number of homes repossessed, and the amount of borrowers getting into arrears on their mortgage payments, would both increase slightly in 2011 compared with last year.
The group accepted that the latest inflation figures - which showed a jump in the cost of living in December - could prompt the Bank of England to raise interest rates "earlier than expected".
However, CML economist Peter Charles said that the lenders' group did not expect the Bank rate to rise above 1%. It currently stands at a record low of 0.5%.
Continue reading the main story “Start Quote
Although this had already caused prices of fixed-rate deals to start to rise, there would not be a sudden surge of arrears problems, he said.
"Money market rates have recently moved higher in anticipation of a rise in base rate and some lenders have recently reflected these increases in their product pricing. Against this backdrop, consumer demand may be weaker than we would otherwise have expected," he said.
"Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payments for most mortgage holders.
"Consequently we believe there will be little change in the level of arrears this year."
Quiet The final month of the year is generally quiet for mortgage lending and the housing market in the UK, as people concentrate on Christmas.
"December is always a quiet month but this was a quieter December than usual," said Paul Sabbato, a director of broker First 4 Bridging.
"There is no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.
"Higher inflation looks like it is going to force the Bank's hand and if that's the case then borrowing will come under further pressure."
He added that people's worries about jobs and rising living costs were putting them off buying a home.
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The £11bn advanced in December was also 18% lower than the same month a year earlier, when some buyers were beating the end of the stamp duty holiday.
The data, from the Council of Mortgage Lenders (CML), is the latest evidence of dampened demand from buyers at the end of 2010.
The CML added that some home loans had been increasing in cost recently.
The figures reveal that during 2010 as a whole, mortgage lending totalled £136.3bn, which was down 5% from £143.3bn in 2009 and the lowest annual total for a decade.
Arrears The CML has previously predicted that the number of homes repossessed, and the amount of borrowers getting into arrears on their mortgage payments, would both increase slightly in 2011 compared with last year.
The group accepted that the latest inflation figures - which showed a jump in the cost of living in December - could prompt the Bank of England to raise interest rates "earlier than expected".
However, CML economist Peter Charles said that the lenders' group did not expect the Bank rate to rise above 1%. It currently stands at a record low of 0.5%.
Continue reading the main story “Start Quote
December is always a quiet month but this was a quieter December than usual”
End Quote
Paul Sabbato
First 4 Bridging
Although this had already caused prices of fixed-rate deals to start to rise, there would not be a sudden surge of arrears problems, he said.
"Money market rates have recently moved higher in anticipation of a rise in base rate and some lenders have recently reflected these increases in their product pricing. Against this backdrop, consumer demand may be weaker than we would otherwise have expected," he said.
"Higher interest rates will also hit the budgets of existing borrowers, although the expected modest rises in base rate will result in a relatively small proportionate rise in monthly payments for most mortgage holders.
"Consequently we believe there will be little change in the level of arrears this year."
Quiet The final month of the year is generally quiet for mortgage lending and the housing market in the UK, as people concentrate on Christmas.
"December is always a quiet month but this was a quieter December than usual," said Paul Sabbato, a director of broker First 4 Bridging.
"There is no doubt that many people who may have been considering buying a couple of months ago have shelved their plans until there is more clarity on when, and by how much, rates will rise.
"Higher inflation looks like it is going to force the Bank's hand and if that's the case then borrowing will come under further pressure."
He added that people's worries about jobs and rising living costs were putting them off buying a home.
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