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Mortgage lending disappoints in March

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Date: Friday 18 Apr 2008

LONDON (ShareCast) - Rising borrowing costs and tighter credit conditions have caused a big drop off in mortgage lending, according to the Council of Mortgage Lenders Friday.

Mortgage lending was 17% lower in March, down from £31.7bn at the same time last year, although gross lending was up 5% last month to an estimated £26.3bn.

But the CML said the monthly improvement should have been something like 20% at this time of year, indicating the terrible state of the UK housing market.

“The picture for mortgage approvals for new business and prospective lending levels in the next few months is worsening,” said CML director general Michael Coogan.

“We await the eagerly anticipated announcement of further action by the Bank of England to respond to these rapidly worsening market conditions,” he added. “Early action is needed if we are to be able to maintain a market in which UK borrowers continue to be able to access mortgage funds at reasonable prices.”

Today’s report also revealed that gross lending for the first three months of the year slipped 8% to £77.2bn from last year’s equivalent.

A full breakdown of activity in March is due on 13 May.