Mortgage lending drops 8%
The Council of Mortgage Lenders (CML) has published data for November showing an 8% drop in mortgage lending.
During the month, gross lending fell to £30.7 billion, down from £33.5 billion in October and £33.2 billion in November of last year.
Figures from the CML are in line with other recent surveys that show a downturn in the property market and it is the first time in over two years that monthly mortgage lending levels have dropped below the level for the same month in the previous year.
The Bank of England’s most recent data puts mortgage approvals at 88,000 in October, the lowest number since February 2005 and the Royal Institution of Chartered Surveyors (Rics) has confirmed that buyer enquiries are continuing to decline.
Michael Coogan, director general of the CML expects the downward trend in gross mortgage lending to continue into 2008 and he believes that lower lending levels will result from a lack of funding, rather than consumer interest.
In terms of house prices, the CML expects inflation to be 1% in 2008, whereas the Rics expects prices to be “broadly unchanged” throughout the year.
The institution does concede that prices could drop in the first-half of the year but believes price falls will not be “extended in duration”, particularly if there are further cuts in the base rate and employment remains strong.
However, repossessions are forecast to rise, from 30,000 in 2007 to 45,000 in 2008 but the Rics makes the point that the figure is well below the levels seen in the 1990s, when repossessions rose to almost 80,000.