Gross mortgage lending down 52%

| February 19, 2009 | 0 Comments
Gross mortgage lending down 52%

The Council of Mortgage Lenders (CML), which represents 98% of the UK’s residential mortgage providers, has reported that gross mortgage lending declined in January, to an estimated £12.4 billion.

The total is down 8% on December and 52% year-on-year.

Traditionally a slight fall is recorded between December and January, however, last month’s figure is at its lowest since April 2001.

The CML’s head of research, Bob Pannell, comments: “Mortgage lending activity continues to be very weak and while people are searching eagerly for some signs of recovery, it would be unrealistic to expect a meaningful revival in lending in coming months.”

He adds “Even when conditions do improve, gross lending will be one of the later measures to recover.”

With house prices continuing to fall, many potential buyers are sitting out the downturn, although earlier this week the Royal Institution of Chartered Surveyors (Rics) reported the third consecutive monthly rise in new buyer inquiries.

However, the Institution cautioned that the trend does not necessarily mark a long-term improvement in the UK property market because mortgage finance remains tight.

The Rics and others continue to urge the Government to provide guarantees for residential mortgage-backed securities, as recommended by the Crosby Report on the UK mortgage market.

Such a move could restore mortgage lending sufficiently to halt the decline in house prices and according to the Rics, action is needed “sooner rather than later”.

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