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Lowest October mortgage lending in a decade

Lowest October mortgage lending in a decade

Category: Mortgages

Updated: 18/11/2010
First Published: 18/11/2010

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Mortgage lending in October fell to its lowest point for the month in a decade, figures from the Council of Mortgage Lenders (CML) show.

An estimated £12.4 billion was lent to homebuyers in the month, the lowest October total since 2000, when lending amounted to £9.9 billion.

The figures mean that lending remained static in October, as the same amount was lent in September.

Lending in October was 9% down from £13.6 billion in the same month last year.

The month-on-month annual comparison is likely to decrease in the coming months, because lending rose sharply in the later months of 2009 as borrowers rushed to take advantage of the stamp duty concession before the end of the year.

Speaking at the CML's 2010 Mortgage Industry Conference and Exhibition, the organisation's chairman, Matthew Wyles, warned that more must be done to help first time buyers gain a foothold on the property ladder.

"As things stand at the moment, we as an industry are likely to end 2010 having done around £137 billion gross lending and £9 billion net lending.

"We are likely to have helped only around 160,000 real first time buyers to buy their first home," he commented.

He went on to say that while home ownership is not a right, lending levels are too low to support the legitimate aspirations of those who work hard and desire it.

"We are already doing this, but perhaps we can put even more creative thinking into the product innovation that has been demonstrated so well by our industry in the past, to identify further risk appropriate ways of lending to first time buyers," he added.

In better news, the number of homeowners consistently struggling to keep up with the repayments on their home is on the wane.

At the end of September, 1.55% of all borrowers had arrears of more than 2.5% of their outstanding balance compared to 1.87% at the end of June 2009.

The CML said that a number of factors – including flexible pay and working practices, an improvement in debt advice and Government support polices – had helped to keep numbers down.

"But the single most important factor behind this improvement has been the difference in the level of interest rates," said the CML.

"The burden on borrowers (and also the cost of some mitigating policies) is significantly less when mortgage rates are around 4% than when they are over 15%."

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