Mortgage borrowing hits 10-year low
Mortgage lending slumped to its lowest September level for a decade as activity in the housing market remained muted, figures showed today.
A total of £11.98 billion was advanced during the month, 1% less than in August and the lowest figure for September since 2000, according to the Council of Mortgage Lenders.
It was the second consecutive month during which lending levels fell, as the housing market failed to benefit from its traditional summer bounce.
The CML warned that lending volumes were likely to remain subdued for the rest of 2010.
Michael Coogan, director general of the CML, said: "Lending volumes do not seem likely to increase substantially towards the end of the year.
"Funding pressures on lenders remain, and the practical implications of government and public spending cuts are beginning to emerge, with a resulting impact on consumer confidence."
Today's figures came after lending during August was also the lowest for the month for 10 years.
But mortgage advances during the third quarter were higher than in the second one, with £37.4 billion lent during the period, 9% more than the previous three months, although still 4% down on the same period of 2009.
Activity in the housing market remained muted over the summer, as potential buyers sat on their hands waiting for the outlook for both the housing market and the wider economy to become clearer.
People are also thought to have been nervous about making a decision to move ahead of today's Comprehensive Spending Review.
But sellers have continued to put their homes on the market, leading to a mismatch between supply and demand and creating a buyers' market in which people are able to negotiate prices down.
Halifax reported that house prices fell by a record 3.6% during September, with some economists warning that property values could fall by around 10% between now and the end of next year.
Meanwhile, the CML urged the Chancellor not to cut the state support available to borrowers who have problems keeping up with their mortgage.
Mr Coogan said: "A concerted effort by borrowers, lenders, the Government and money advice agencies has helped to keep mortgage arrears and possessions in check during the current economic downturn.
"These support measures help contain the wider costs of homelessness, and deliver wider benefits to the Government. Now is not the time to weaken the existing safety net."