Mortgage lending still depressed says CML
Tuesday, 13 May 2008 12:53
No signs of improvement yet the CML has warned
The Council of Mortgage Lenders has warned that it will be some time before borrowers feel the benefit of the efforts of the Bank of England to ease the credit crunch.
The news came as the CML released data which revealed mortgage lending in March was down one per cent from the previous month and nearly half (48 per cent) what it was at the same time last year.
The number of loans for house purchase declined to 46,500 in March from 47,200 in February and from 89,000 in March 2007.
The CML said figures reflected the decline in house purchase transactions which it expected to continue in the coming months in line with recent mortgage approvals data from the Bank of England.
It blamed the continued decline in lending on the shortage of funding in the mortgage market as a result of credit market conditions.
Gross mortgage lending was £75 billion in the first quarter, down from £83.9 billion in the first quarter of 2007. The number of loans to first-time buyers declined in March to 17,800, down 1 per cent from 17,900 in February and 45 per cent from 32,500 in March last year.
Remortgage activity was up in the first quarter of 2008 to £33.3 billion accounting for 44% of lending, up from 35% in the last quarter of 2007 and the highest share in three years.
But the CML said this was likely to be driven by the large numbers of borrowers coming short-term fixed-rate mortgages, up to 1.4 million homeowners are expected to come off attractive short-term fixed rates over the course of the next year.
The proportion of ‘other' lending (predominantly made up of buy-to-let loans and further advances) increased in March to £7.2 billion, accounting for 30% of mortgage lending, up from £6.3 billion in February and £7 billion in March 2007.
CML director general, Michael Coogan said there had been a slight improvement in the credit markets since the Bank of England increased its efforts to help the banks cope with the credit crunch. But he said any improvement in the credit markets would take time to filter through to mortgage borrowers.