Mortgage lending sees a drop
October 19, 2009
According to a recent report there was a drop in mortgage lending for the month of August, with lending levels falling by around 13 percent. These figures were released by the Council of Mortgage Lenders, which said that mortgage lending for the months of August fell to around £12.6 billion from the £14.5 billion seen in July.
However, the CML did say that over the course of this year mortgage lending, property sales, and house prices had all picked up from the very low levels seen last year, albeit by just a small amount.
The Bank of England has stated that whilst there have been improvements many lenders are still very wary because they are not sure how long the house price revival that is currently being seen will last.
Banks are still looking for higher deposits as well, according to the central bank, which stated in a recent report: “There has been no increase in the proportion of lending accounted for by mortgages with loan to value ratios (LTVs) of greater than 90%.”
The report also stated that lenders were still being cautious over lending due to unemployment levels and risks, which had also contributed towards the lower lending levels seen in August.
The central banks stated: “The major UK lenders remained cautious about prospects for house prices and unemployment.” However, the report said that lenders were now approving over 80 percent of new applications, which was an increase from the 70 percent that were being approved at the start of the year.
The Council of Mortgage Lenders stated: “The likelihood of a significant pick-up in lending remains weak, but the prospects for wholesale funding markets are improving. This could result in a gradual easing in constraints on the supply of funding over time. However, demand from consumers and a prudent approach to lending criteria are likely to mean that the market remains subdued.”
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