Lending to U.K. buyers of property to let, who make up 6% of the mortgage market, slowed in the second half as house prices fell, according to a survey from the Council of Mortgage Lenders.
Second-half lending to so-called buy-to-let purchasers fell 18% from the first half and 16% from the same period a year earlier, to $18.3 billion, said the council, whose members account for 98% of mortgage lending in Britain.
The U.K. government said Monday that December average house prices fell a nonseasonally adjusted 0.7% from the previous month, to $334,250. The average price rose at an annual rate of 10.7%, down from 13.7% in November.
"The broad picture is that house prices are stagnating," said Nick Kounis, an economist at Fortis Bank in the Netherlands. Monday's figures are "broadly in line with a soft landing scenario for the housing market."
The Bank of England's Monetary Policy Committee said Nov. 10 that it expected house prices to start falling. HBOS PLC, the United Kingdom's biggest mortgage lender, predicted Dec. 3 that house prices would fall this year for the first time in a decade.
Five interest rate increases in the 10-month period that ended in August have ended a five-year housing boom and deterred buy-to-let buyers, who are concerned that rents will not cover mortgage payments.
"As the housing market boom gradually subsides, it is no surprise that growth in buy-to-let lending is slowing down," said Andrew Heywood, a senior policy adviser at the council. "This trend of slower but continuing market growth is what we expect to see throughout 2005."
Also Monday, the Office of the Deputy Prime Minister said the December annual house-price inflation rate was the slowest since April 2004. In London property inflation slowed to 3%, down from 7% in November. The average house price in London remained the highest in England, at $480,517, according to the office.
Alan Castle, an economist at Lehman Brothers in London, said the office's report reflects "housing market weakness that had already been picked up by other house price indexes a few months ago."
