Mortgage Lending at 6 Year Low

Mortgage lending in the UK has fallen to a 6 year low according to statistics revealed this week by the Council of Mortgage Lenders (CML). Lending over the course of 2008 fell by 30% on the previous year, bringing lending levels down to their lowest level since 2002.

As banks have demonstrated their reluctance to lend, the inability for first time buyers or those with a high LTV to find a mortgage deal is largely behind the drop in lending, as is a generally cautious approach to spending from would-be buyers mindful of the affects of lowering property values.
Total lending in 2008 fell to £256.4bn from £363.7bn in 2007 whilst December 2008 figures also demonstrated the reduction in mortgage lending, falling to the lowest level for a single month since April 2001.

The stagnant situation in the housing market is frustrating for those who are keen to sell their homes and the CML predict that the situation is unlikely to improve in the coming year. For those attempting to sell their properties, selling in a market with very few buyers may seem close to impossible. As a result of this difficulty, many people are considering alternative forms such as selling their home and renting them back.

December’s home sale figures from Her Majesty’s Revenue and Customs (HRMC) demonstrate a downward trend of property sales with just 61,000 sales across the UK in the month – a 41% drop on the same month in 2007. The figures are unpromising for those hoping to sell property fast as we move into 2009, with lending and general consumer spending set to remain low.

The government’s latest wave of recapitalisation measures are intended to encourage increases in lending from the banks, although analysts have remained sceptical that this investment will result in any notable, short-term improvement in the market.