Mortgage lending almost halves

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By Jana Weigand

Date: Tuesday 13 May 2008

LONDON (ShareCast) - Mortgage lending almost halved during the first quarter compared with a year ago, according to new figures from the Council of Mortgage Lenders.

The CML also warned that house sales would fall even further in the next few months due to the shortage of funding in the mortgage market.

The number of loans to home buyers dropped to 46,500 in March, down 48% from 89,000 last year and 1% lower that February’s 47,200. Gross mortgage lending was £75bn, down from £83.9bn in the first quarter of 2007.

The number of loans to first-time buyers declined to 17,800 in March, down 1% from 17,900 in February and 45% lower than last year's 32,500.

Loans to home movers declined to 28,700, down 2% from 29,300 the previous month and down 49% from 56,300 in March 2007.

However, the CML said remortgaging activity has remained relatively resilient, increasing to £33.3bn in the first quarter up from 35% last year.

“House purchase transaction volumes will continue to deteriorate in the coming months as recent approvals data from the Bank of England has shown,” said CML director general Michael Coogan.

“Since the introduction of the Special Liquidity Scheme, there has been a slight improvement in credit market conditions with libor moving in a more helpful direction. But libor still remains high relative to the Bank rate and any improvement in credit market conditions will take time to feed through into the mortgage market,” he added.

The news followed a survey from the Royal Institution of Chartered Surveyors (RICS) revealing that house sales are running at their lowest levels in thirty years.

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