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Slump in mortgage lending figures

Published:: 20 October 2008
Topic:: News,Money,Mortgages

Stifled demand due to the stagnant housing market saw mortgage lending slump to its lowest level for more than three-and-a-half years during September.

Figures from the Council of Mortgage Lenders (CML) show that a total of £17.7 billion was advanced during the month, 10% less than during August and 42% below the level for September last year.

There is typically a seasonal fall in mortgage lending between August and September, the group said, although it added that the drop this year was more marked than usual.

A combination of lower consumer demand and ongoing funding constraints meant mortgage lending was likely to remain subdued for the rest of 2008 and into the first quarter of next year, it added.

Michael Coogan, CML's director-general, said: "The mortgage market is open for business.

"But weakening consumer demand and ongoing funding constraints will dampen monthly lending figures for the rest of this year and into the first quarter of 2009."

The group now estimates that total lending for 2008 will be around £255 billion, down from £363 billion in 2007 and the lowest annual total since 2002.

A more dramatic fall will be seen in net lending, which strips out redemptions and repayments, expected to be around only £40 billion, less than half the level of net lending of £108 billion in 2007.