Mortgage lending is down to a trickle

by Property 118

10:39 AM, 27th December 2010
About 10 years ago

Mortgage lending is down to a trickle

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Mortgage lending is down to a trickle

Banks and building societies admit they are lending less money to fewer people, in the latest figures from the Council of Mortgage Lenders (CML).The CML also warned the low levels of lending are unlikely to change in the foreseeable future. 

Lending statistics show a downward trend across the board – to first time buyers, movers and homeowners refinancing. 

The CML – the trade association representing all the UK’s big banks and building societies – released figures for October compared with September and October 2009. 

  • Mortgages for first time buyers dropped by 5% to 17,000 loans worth £2 billion from September
  • Loans for movers and remortgages were down 3% from September to 26,400 mortgages worth £4.7 billion.

Year-on-year comparison figures are unreliable as those for October 2009 were distorted by the stamp duty holiday coming to an end. 

Another change for mortgage statistics from the CML and other lenders, like the Halifax, this month is the inclusion of ‘affordability’ information. 

The inference from lenders is ‘we’re lending less but loans are more affordable because they are taking less from your net income.’ 

The CML says the affordability ratio for first time buyers in October is 13.3%, down from 13.4% in September and 15.1% in October 2009. 

For movers and remortgagors, the figures for October are 9.7%, down from 9.8% in September and 11.1% in October 2009. 

More borrowers opted for repayment mortgages – paying the loan and interest back at the same time –than interest only mortgages in October. At 93%, the figure is the highest for five years. 

Michael Coogan, director general of the CML, said: “With 2009 lending levels artificially inflated by the end of the stamp duty holiday, we expected to see a decline in lending year-on-year, so today’s figures are not surprising. 

“Consumer confidence has also been affected by October’s spending review, despite the relative affordability of monthly mortgage payments, and so a stable but small lending market will continue for some time to come.”

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