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Mortgage lending sees slump

Published:: 30 September 2008
Topic:: News,Money,Mortgages

Mortgage lending plummeted in August to its lowest level ever recorded as lenders continue to struggle to raise finances because of the ongoing credit crisis.

The Bank of England data showed that net lending was only £143 million during the month, a fraction of July's sum of just under £3 billion and the lowest figure recorded by the Bank's statistics series since it began in 1993.

Industry analysts said that the slide was due to the combination of falling house prices putting people off moving and the credit crunch making it hard for potential buyers to raise a mortgage.

The number of mortgages approved for house purchase slid to a new record low of 32,000 during the month, with total mortgage advances reaching just £19.19 billion - the lowest figure for six years.

Howard Archer, chief UK and European economist at Global Insight, said: "Yet more very disturbing mortgage data that heighten concerns over the potential depth and length of the housing market correction.

"The dire Bank of England mortgage data shows that housing market activity is being decimated by the highly damaging combination of stretched buyer affordability and tight lending practices."