Mortgage lending activity plummets to 10-year low
The worst August for mortgage lending in a decade prompted further concerns that activity in the housing market is slowing down.
A total of £11.4bn was advanced last month, 14% less than during July and the lowest level for August since 2000, according to the Council of Mortgage Lenders (CML).
There is traditionally a dip in lending between July and August, but the latest drop was more pronounced than in previous years.
The CML warned that the mortgage market looked set to remain challenging for the rest of the year, with lending volumes likely to be below the level seen during the last months of 2009.
It added that the financial sector was now approaching the point where institutions would have to begin repaying the government funding which was put in place at the height of the credit crunch, which would inevitably reduce the amount of credit that could be advanced to the wider economy.
The figures add to a run of gloomy data on the housing market, with Nationwide reporting price falls of 0.9% during August.
Economists predict house prices will fall by 10% over the final months of this year and into 2011.