New purchase mortgage lending falls 46%
The British Bankers’ Association (BBA) has reported that mortgage lending by its members fell 18% in March, compared with February.
In all, 35,417 new mortgages were approved for house purchases, a 46.2% drop on March 2007.
The gross value of all mortgage lending during the month (including re-mortgages and equity withdrawal) fell 15% on March 2007, to its lowest level since 2000.
Lenders expect the decline to continue despite this week’s action by the Bank of England, which has provided banks with the opportunity of swapping some of their difficult-to-trade mortgage-backed assets for government bonds.
The £50 billion scheme aims to restore confidence in the money markets and encourage banks to overcome their suspicions about hidden losses relating to the US sub-prime mortgage crisis, and restore interbank lending.
The level of approvals for home loans is a sure indicator of future house prices and the March figures bring the market closer to the possibility of an outright crash.
According to David Dooks, the BBA’s director of statistics, low liquidity in the banking sector, a reduction in the number of mortgages available and tighter lending criteria have made their mark.
The BBA’s members provide around 70% of all mortgage lending in the UK.