Mortgage lending fell last month.
The mortage market is expected to remain subdued over the next year.
Gross mortgage lending fell to £9.2 billion in January, according to the Council of Mortgage Lenders.
The latest statistics reveal that the fall marks a 13% decline from December’s figures. However they also indicate a 5% rise from the £8.8 billion that was lent out in January 2010.
The CML said that the data illustrates that “activity levels have stabilised with little evidence to show any significant change within the next 12 months”.
CML economist Peter Charles explained that the lack of impetus in the mortgage sector is a reflection of the sluggish state of the economy in general.
He said: “The Bank of England’s Inflation Report this week noted that the UK banks face a significant funding challenge over the next couple of years: in total, including funding supported by the public support schemes, around £400 billion to £500 billion of wholesale term debt is due to mature by the end of 2012. This implies that, even in the unlikely event of a marked upturn in mortgage demand, the level of activity in the mortgage market can be expected to remain constrained”.
He continued: “As a greater degree of equilibrium is restored to financial markets, the availability of funding for mortgage lending should improve from current levels to support more normal levels of activity. However, the unprecedented expansion of wholesale funding, and hence mortgage lending, experienced in the mid 2000s is unlikely to return”.
Mr Charles also touched upon the problems faced by first time buyers – he said that current lending restrictions mean that banks are still favouring customers with larger deposits. Therefore the number of mortgage opportunities for people who want to climb up the first rung of the property ladder are still low.