Mortgage lending drops to eight month low as pound suffers

The Pound is already under continuous pressure because of the uncertainty of a general election due by June. The markets seem to be worrying whether the next government will be able to tackle the growing debt burden effectively, now Mortgage lenders have approved fewer mortgages in January than in the last eight months.

According to the Bank of England who believes the reason for fewer mortgages being sold was due to the bad weather and the end of the tax breaks for some house sales. Stamp duty for houses less than £175,000 was re-introduced on the 1st January 2010. 48,198 mortgages were sold in January compared to December’s total of 58,233.

Most economists expected a fall to at least 50,000; however the scale of the drop nonetheless prompted fears that the house price fall that has started to show improvement could unsettle consumers. Philip Shaw an economist at Investec mentioned that they will have to see if the down turn is “temporary or if it was a start of a longer-term decline.”

Sterling actually fell to a 10-month low versus the dollar after the data. Click here to read more on this story.