CML concerned by weak mortgage lending

20/10/2009

Mortgage lending increased last month, according to figures released today (October 20th).

The Council of Mortgage Lenders (CML) said that the value of total loan approvals rose by two per cent from August to reach £12.5 billion.

However, this is still 27 per cent down from September 2008's total.

The monthly rise signifies that lending conditions could be improving for homebuyers and homeowners, following Bank of England interest rate cuts and an apparent return to growth in the real economy.

However, the annual decline highlights the damage caused to the property market by the credit crunch and economic downturn.

The CML also said that, while home purchase loan activity was on the increase, remortgaging had declined over September 2009.

This in turn suggests that many homeowners are struggling with their existing mortgage costs after failing to be accepted for a lower-rate loan.

Many are also choosing to switch to their lenders' Standard Variable Rates after coming off their fixed deal, due to the low interest rate environment.

CML economist Paul Samter said: "House buying activity is running at considerably higher levels than around the turn of the year.

"However, it remains weak on any historic comparison and is unlikely to rise much further given the constraints the lending community faces and a still difficult economic backdrop."

Tags; Housing Debt and Bills, Young Family Finances,

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