Friday July 18, 11:17 AM
Big Slump In Mortgage Lending
By Sky News
Mortgage lending has fallen by 32% to around £24 bn in the last year, according to new figures.
Figures from the Council of Mortgage Lenders show the rate at which mortgage lending is falling has accelerated as the credit
crunch tightens its stranglehold on the market.
Banks and building societies advanced a total of just £23.8 billion during June, the lowest level since February 2006.
The figure was 3% lower than the amount lent in May.
The CML said: "The year-on-year decline has gathered pace in recent months; lending in the first quarter of 2008 was down 11 percent on 12 months earlier, while the second quarter was down 21 percent."
The total was the lowest figure for June since 2003, yet the month is traditionally one of the busiest for the housing market.
CML director general Michael Coogan said: "Market activity during a traditionally busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand.
"While by historic comparisons we still have had a good level of gross lending, new net lending has been constrained in 2008 and this picture will continue for the rest of this year."
Lending levels are expected to remain low for the foreseeable future, with other indexes reporting depressed figures for mortgage approvals.
Mortgage lending is being hit by a double whammy of the downturn in the housing
market and the problems in the mortgage market caused by the credit crunch.
A steep fall in the number of homes changing hands, with transactions running at around half the level they were a year earlier, has hit lending for house purchase.
At the same time, tighter lending criteria and high mortgage rates have reduced the incentive for people to remortgage, with many people sitting on lenders' traditionally uncompetitive standard variable rates until the market improves.
::The CML's members are banks, building societies and other lenders who undertake around 98% of all residential mortgage lending in the UK. There are 11.8 million mortgages in the UK, with loans worth over £1.2 trillion.
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