August saw gross mortgage lending fall by 14 per cent, new data shows.
The latest figures from the Council of Mortgage Lenders show that gross mortgage lending was an estimated £11.4billion in August, compared to £13.3billion in July. August lending was down six per cent year-on-year, from £12.1billion in August 2009.
The figures for August also reveal that last month mortgage lending was at its lowest level since 2000, when it was £11.1billion. August often sees a decline in lending following on from July due to the summer holidays, but this year’s decline was bigger than most. The next few months are unlikely to see a rise on last year’s levels for the end of the year, as the last months of 2009 saw an upsurge in lending as borrowers rushed to make the most of the stamp duty holiday before it ended in January.
In today’s market commentary, CML chief economist Bob Pannell commented: “We face the prospect of a difficult second half of the year. However, the Bank of England is likely to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers.”
Alan Cleary, Managing Director of Precise Mortgages said: “This is bad news for the industry. We have gone back ten years in terms of volume. We’re back to the glory days of the Blair government, the days when websites still felt exotic, and The Spice Girls were at the top of the charts. That’s bad enough. But worse still is the fact that back in 2000, the average price of a property was about half what it is today. It’s plain to see that housing transactions will remain subdued until the issue of mortgage funding is addressed.”
CML’s members are banks, building societies and other lenders who together undertake around 94% of all residential mortgage lending in the UK. There are 11.4 million mortgages in the UK, with loans worth over £1.2 trillion. CML does not publish statistics for mortgage approvals; the data relates to mortgage advances only.