Fall in mortgage lending confirms shaky market
The Council of Mortgage Lenders (CML) has reported that mortgage lending fell in December to its lowest level since May 2005, sending fresh jitters through the housing market over the continuing fall-out from the global credit crunch.
[UKPRwire, Thu Jan 24 2008] The Council of Mortgage Lenders (CML) has reported that mortgage lending fell in December to its lowest level since May 2005, sending fresh jitters through the housing market over the continuing fall-out from the global credit crunch.
The CML’s report showed that gross lending in December totalled £22.6 billion, down 25% from £29.9 billion in November, and 21% from £28.6 billion in December 2006. The sharp fall between November and December 2007, in contrast to a more normal seasonal fall of around 6%, indicated that December witnessed an accelerated downturn.
However overall 2007 was the strongest ever year for gross mortgage lending, according to the CML, reaching an estimated £362bn, a 5% increase over the previous year’s total of £345bn.
The slowdown seen in the end-of-year lending report was confirmed by separate data from the Building Societies Association, which showed a 20% fall in the total value of loans approved, to £3.14bn.
All the December data point to continuing turmoil and a marked downturn in the housing market, as mortgage lenders feeling the pinch of the credit squeeze find it harder to obtain funds, which in turn makes it costlier and more difficult for borrowers looking for affordable mortgage products.
Nationwide, the UK’s biggest building society, announced this week that it was raising its tracker mortgage rates for new borrowers between 0.05% and 0.15% from January 23rd, the second increase since November.
“Borrowing and affordability constraints will continue over the coming months, but the prospect of further rate cuts should help stimulate the housing market,” said Lawrence Smith of Decision Homebuyers. “Even as lenders weather the storm of the credit crunch fall-out, the mortgage market is still competitive and there are some good mortgage deals out there especially for low-risk borrowers.”
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