Lowest August mortgage lending for a decade - Mortgages - News - Moneyfacts


Lowest August mortgage lending for a decade

Lowest August mortgage lending for a decade

Category: Mortgages

Updated: 20/09/2010
First Published: 20/09/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Lending to home buyers fell to its lowest August total for a decade last month, as the housing market continued its summer slump.

The momentum built up in the housing market during the earlier part of the year appears to have stalled, as price rises have slowed or even stopped.

This has been caused at least in part by the easing of demand outstripping supply.

And figures from the Council of Mortgage Lenders (CML) have revealed that gross lending in August was the lowest for the month since 2000, when a figure of £11.1 billion was recorded.

An estimated £11.4 billion was lent last month, down 14% from £13.3 billion in July and 6% from £12.1 billion in August 2009.

Lending volumes are set to remain below last year's levels in the coming months as activity was boosted by the upcoming end of the stamp duty holiday in the last few months of 2009

"We face the prospect of a difficult second half of the year," said Bob Pannell, CML chief economist.

"However, the Bank of England is likely to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers."

The low interest rate environment has been critical to keeping the number of home owners in mortgage arrears lower than they could have been in such economically challenging times.

However, the tightening in credit supplies, the effect of public sector cuts and impending regulation from the Financial Services Authority that could stop many potential buyers from securing a mortgage are all apparent.

"Against this backdrop, there is unlikely to be a significant improvement in the housing and mortgage markets for some time," said the CML.

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