Sharp decrease in mortgage lending

Latest figures from the Council of Mortgage lenders show a sharp decrease in mortgage lending for December, which was at its lowest level for two-and-a-half years.

A lack of confidence in the property market and tighter lending criteria have been blamed for a 21% year-on-year drop in the figure, which stood at £22.6 billion, 21% less than in November.

During 2007, mortgage lending totalled £362 billion, 5% more than the £345 billion borrowed in 2006.

Michael Coogan, director general of the CML, comments: “The credit crunch moved into its fourth month in December and continued to constrain the cost and availability of funds to lenders and, in turn, the cost and number of mortgage products available to borrowers.”

He adds: “Looking forward, the recent decline in interbank lending rates and the prospect of further reductions in base rates in 2008 should provide some help to the market, although lending volumes are likely to remain weak for the next few months.”

The Building Societies’ Association has also published data for 2007; gross mortgage lending remained flat during the year, at £52.1 billion, as compared with £52.8 billion in 2006.

However, net lending (gross lending less redemptions and repayments) fell by 21% to £12.6 billion.

During December total lending fell to £3.73 billion, down from £4.1 billion in November.

Approvals were also down during the month; £3.14 billion in mortgages were agreed, compared with £4.24 billion in November.

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