MORTGAGE lending slumped to its lowest level for more than three years in August, the Council of Mortgage Lenders reported yesterday. The total value of new lending last month was just £21.8 billion, a 12 per cent fall from July – and 36 per cent lower than the corresponding month last year.
According to the CML, the figure was the lowest monthly lending level since April 2005 and the lowest figure for August – typically one of the busiest months – since 2002.
The CML attributed the drop to "exceptionally low" mortgage turnover and l
ower-than- expected remortgaging levels, with lending set to remain subdued in the coming months.
Michael Coogan, director-general of the CML, said: "These figures reflect the heightened uncertainty for both lenders and consumers in the mortgage market at present.
"Lenders are uncertain about future sources and cost of funding, while consumers are unsure about how much further and for how long house prices will continue to decline."
Stretched buyer affordability, tighter lending conditions and negative house price expectations are inhibiting housing market activity, said Howard Archer, chief economist at Global Insight.
He added: "The current financial-sector turmoil is likely to deepen pressure on the housing market through further tightening credit conditions and upward pressure on interest rates."
The Scottish market has fared better than the UK as a whole, but David Carmichael, head of Savills Private Finance in Glasgow, said this could change. "Loan-to-values are lower in Scotland and the percentage of income committed to borrowing is lower than elsewhere," he said. "However, while we are a little behind the south, I expect the gradual deterioration will more closely resemble the rest of the UK in coming months."
The full article contains 295 words and appears in The Scotsman newspaper.
