Mortgage lending at lowest level for 8 years

Thursday, 19 March 2009 12:00

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.

February is typically the weakest month for mortgage completions.

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."

David Smith, senior partner at Dreweatt Neate estate agents, said: "While interest in the property market is growing by the day, its fate ultimately depends on the confidence of prospective borrowers, the availability of mortgage finance and the realism of sellers. There are question marks over all three."

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