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| Mortgage lending slump continues | Mortgage lending slump continues |
| (40 minutes later) | |
| The slump in mortgage lending continued in September, according to the latest figures from the Council of Mortgage Lenders (CML). | The slump in mortgage lending continued in September, according to the latest figures from the Council of Mortgage Lenders (CML). |
| Total lending was £17.7bn in September, down 10% from August and 42% lower than in September last year. | |
| This was the lowest level of lending for any month since January 2005 and the lowest September figure since 2001. | This was the lowest level of lending for any month since January 2005 and the lowest September figure since 2001. |
| The CML said it now expected that new lending this year would be only 37% of the level recorded during 2007. | The CML said it now expected that new lending this year would be only 37% of the level recorded during 2007. |
| "Weakening consumer demand and ongoing funding constraints will dampen monthly lending figures for the rest of this year and into the first quarter of 2009," said the CML's director general, Michael Coogan. | "Weakening consumer demand and ongoing funding constraints will dampen monthly lending figures for the rest of this year and into the first quarter of 2009," said the CML's director general, Michael Coogan. |
| The worsening economic climate is set to provoke the Bank of England into further interest rate cuts over the coming months Simon Rubinsohn, Royal Institution of Chartered Surveyors | |
| "We estimate gross lending in 2008 will be around £255bn (£363bn in 2007) and net lending of around £40bn (£108bn in 2007)." | "We estimate gross lending in 2008 will be around £255bn (£363bn in 2007) and net lending of around £40bn (£108bn in 2007)." |
| Downward trend | |
| The figures from the CML chime with other evidence that has indicated the UK's housing market is going through its sharpest downturn for many years. | |
| |
| Andrew Montlake of mortgage broker Cobalt Capital said the CML's figures were depressingly familiar. | |
| "They reflect the seismic shift we have seen in the mortgage market," he said. | |
| "Despite the bail-outs that have taken place around the world I expect very little change in the mortgage lending figures for the rest of this year, mainly because the mainstream lenders are only accepting 'quality', low loan-to-value business," he added. | |
| Another rate cut? | |
| Despite the Bank of England's recent emergency cut in interest rates, taking its bank rate down from 5% to 4.5%, there is no sign at all of mortgage lending becoming easier or of the downturn in the market easing off. | |
| The traditional 95%-mortgage has all but disappeared, with most borrowers required to put down a minimum deposit of at least 10%, and often more. | |
| And earlier this month, the Bank of England's own official survey of lending intentions by banks and building societies found that lenders intended to restrict lending even further in the rest of the year. | |
| "Funding constraints remain the key issue for lenders at the present time despite the governments attempt to revive mortgage lending as part of the recently announced recapitalisation programme," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics). | |
| "However if nothing else, the worsening economic climate is set to provoke the Bank of England into further interest rate cuts over the coming months. | |
| "A further half point move is quite possible at the November meeting," he said. |