Record year for lending, says CML

Record gross lending has led the Council of Mortgage Lenders (CML) to label 2007 as a "banner year" for the UK mortgage market.

Despite the global implications of the US sub-prime mortgage crisis, the UK continues to offer a "highly competitive" market with good deals available for better-risk borrowers, said Michael Coogan, director general of the CML.

The mortgage market will also be aided by further reductions in interest rates as the Bank of England looks to steer the economy away from a possible recession this year amid financial difficulties in the US, he suggested.

However, lending volumes are expected to remain week over the coming months after a 25 per cent decline to around £22.6 billion was recorded in gross lending last month.

A seasonal fall of around six per cent is typical in November and December but the impact of the credit crunch served to constrain the cost and availability of funds to lenders, Mr Coogan noted.

Commenting on the figures, the Royal Institution of Chartered Surveyors has commented that continued tough lending criteria enthused by credit crunch is likely to provide further problems for first-time buyers.

Last month, AWD Chase de Vere said that 2008 could provide a "shock" for people coming off fixed-rate mortgages.