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| Version 4 | Version 5 |
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| Mortgage lending at 34-year low | Mortgage lending at 34-year low |
| (about 1 hour later) | |
| The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said. | The number of mortgages lent to house buyers fell last year to its lowest level since 1974, the Council of Mortgage Lenders (CML) has said. |
| There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007. | There were just 516,000 mortgages granted to house buyers, down 49% from the level seen in 2007. |
| The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%. | The squeeze on mortgage funds has seen widespread rationing by lenders, which meant that first-time buyers had to put down an average deposit of 22%. |
| The CML believes that lending is likely to fall even further this year. | The CML believes that lending is likely to fall even further this year. |
| "The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year," said Michael Coogan, the CML's director general. | "The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year," said Michael Coogan, the CML's director general. |
| "This low level of transactions is insufficient for the functioning of an efficient market," he added. | "This low level of transactions is insufficient for the functioning of an efficient market," he added. |
| Action needed | Action needed |
| The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007. | The slump in lending and sales has been directly responsible for the sudden collapse of house prices seen since the credit crunch started in the summer of 2007. |
| From a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago Andrew Montlake, Cobalt Capital mortgage brokers Uk's mortgage market in graphics | From a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago Andrew Montlake, Cobalt Capital mortgage brokers Uk's mortgage market in graphics |
| Last year the number of loans to first-time buyers fell by 46% to just 194,200, which was the lowest figure since the CML's records started in 1974. | Last year the number of loans to first-time buyers fell by 46% to just 194,200, which was the lowest figure since the CML's records started in 1974. |
| And mortgages granted to people moving house dropped by more than half to 322,200. | And mortgages granted to people moving house dropped by more than half to 322,200. |
| The government has launched a number of initiatives to stimulate bank lending, which it is widely hoped will feed through into greater lending to home buyers. | The government has launched a number of initiatives to stimulate bank lending, which it is widely hoped will feed through into greater lending to home buyers. |
| But the CML expects that in 2009 new lending will fall to a level where it will be outstripped by people repaying their mortgages. | But the CML expects that in 2009 new lending will fall to a level where it will be outstripped by people repaying their mortgages. |
| "Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through," said Mr Coogan. | "Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through," said Mr Coogan. |
| "Further action may still be necessary to increase transactions, stabilise prices and restore confidence," he added. | "Further action may still be necessary to increase transactions, stabilise prices and restore confidence," he added. |
| Choked off | Choked off |
| Despite the Bank of England cutting the Bank Rate in recent months to just 1%, the dramatically lower cost of repaying a mortgage has not led to a revival in buying and selling houses. | Despite the Bank of England cutting the Bank Rate in recent months to just 1%, the dramatically lower cost of repaying a mortgage has not led to a revival in buying and selling houses. |
| Lenders have increased the level of deposits they demand from borrowers, choking off the supply of potential buyers. | Lenders have increased the level of deposits they demand from borrowers, choking off the supply of potential buyers. |
| About two-thirds of all new mortgage deals currently require at least a 25% down payment from the borrower. | About two-thirds of all new mortgage deals currently require at least a 25% down payment from the borrower. |
| And the average 22% deposit currently being put down by first-time buyers is the highest since the CML's records started back in 1974. | And the average 22% deposit currently being put down by first-time buyers is the highest since the CML's records started back in 1974. |
| Until the end of 2007 a 10% deposit was the norm. | Until the end of 2007 a 10% deposit was the norm. |
| Andrew Montlake, at mortgage brokers Cobalt Capital, said business was now dire. | Andrew Montlake, at mortgage brokers Cobalt Capital, said business was now dire. |
| "The CML data crystallises what we already knew, namely that from a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago." | "The CML data crystallises what we already knew, namely that from a mortgage perspective, 2008 was a massacre - the entire market is barely recognisable from what it was two years ago." |
| Peter Bolton King, chief executive of the National Association of Estate Agents (NAEA), said there was now a lot of pent up demand. | |
| "NAEA figures show that there is a huge demand for property from first-time buyers, who are increasingly visiting estate agents, registering their interest and searching for property," he said. | |
| "These figures demonstrate that they are being frustrated at the final hurdle because lenders are not making mortgages available." |