Mortgage Lending Is Halved In A Year

19 February 2009

Mortgage lending slumped to £12.4bn during January - that is 52% below the same time last year.

The figure was also 8% down on December.

The Council of Mortgage Lenders said total of £12.4bn was advanced by the major mortgage lenders during January.

The group said there was normally a slight decline in lending levels between December and January.

But the figure was the lowest monthly level recorded since April 2001, it said.

A slight increase in the number of mortgages approved during December had led commentators to suggest the slump in the market had bottomed out.

But the latest figures seem to put pay to that.

Bob Pannell, CML head of research, said: "Mortgage lending activity continues to be very weak and while people are searching eagerly for some signs of recovery, it would be unrealistic to expect a meaningful revival in lending in coming months.

"Even when conditions do improve, gross lending will be one of the later measures to recover."

Anecdotal evidence from estate agents suggests there is increased interest in the housing market on the back of recent interest rate cuts and the steep property price falls.

The Royal Institution of Chartered Surveyors has reported a rise in new buyer inquiries for three consecutive months.

Today's CML figures show that this increased interest has not yet translated into transactions.

Howard Archer, chief UK and European economist at IHS Global Insight, said the CML data indicated that the new year brought no change of fortunes for mortgage activity.

He said: "While latest survey evidence indicates that buyer inquiries are now picking up significantly as people are attracted by lower house prices and the Bank of England slashing interest rates, we are sceptical that this will lead to a marked up in actual sales anytime soon.

"We certainly expect house prices to continue to fall for some considerable time to come."

Source: uk.news.yahoo.com