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Mortgage lending at lowest level for 8 years

Thursday, 19 March 2009 10:39 AM

Gross mortgage lending declined to £9.9 billion last month, down 15 per cent since January.

According to the Council of Mortgage Lenders (CML) gross lending figures for February, lending was down 60 per cent year on year, and was at the lowest level since February 2001.

The CML said although their figures showed a larger monthly decline than the 3-4 per cent usually experienced at this time of year, the numbers were in line with the forecast of £145 billion gross mortgage lending in 2009.

Michael Coogan, CML director general, said: "Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to national savings and investments, which has a negative impact on their ability to lend.

"This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more.

"At the same time, the government's own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained."

February is typically the weakest month for mortgage completions.

Jonathan Turpin, chief executive of Moveme.com, said: "It is no surprise that gross mortgage lending declined further in February. Consumer confidence remains low and the majority of first-time buyers who are still looking to enter the market are being prevented by unattainably high deposit requirements.

"Until we see a return of a broader and more accessible range of mortgage products, the reality of homeownership is still a long way off for many first-time buyers. For those who do not have a sizable deposit, the significant house price house falls which we have been experiencing cannot be exploited."

Liberal Democrat Housing spokesperson, Sarah Teather, added: "The government allowed the bubble in the housing market to get out of hand for many years. We are now seeing the results of that bubble bursting, with a collapse in house prices and new housing developments being mothballed.

"Ministers should now allow councils to borrow money to buy up cheap land and empty properties to save construction jobs and rebuild Britain's dwindling stock of social housing."

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