February mortgage lending falls 7%

The Council of Mortgage Lenders (CML) has reported that mortgage lending fell 7% in February.

A total of £24 billion was borrowed during the month, down from £25.9 billion in January and 6% less than in February 2007.

The CML has also warned that the “slower phase in the housing market” will continue unless the Bank of England offers more support to the UK’s mortgage lenders.

Commenting on the Bank’s latest increase in weekly funding (to over £10 billion) the CML’s director general, Michael Coogan, said it was “as a step in the right direction” but that “a programme of more aggressive, broader-based intervention would be entirely appropriate for the Bank in the current environment of uncertainty”.

Lenders are continuing to review their criteria, with many increasing interest rates and raising deposit requirements, so that homebuyers who do not have a 5% deposit now find it difficult to secure a mortgage.

According to Mr Coogan: “Demand for mortgages remains strong but cannot be fully met from existing funding. This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity.”

Earlier this month, the CML reported that the number of new homebuyers taking out mortgages fell to 50,300 in January. A nine year low.

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