Gross mortgage lending tumbles again to hit nine-year low

Mortgages for house purchase slipped again and gross mortgage lending for October was £7.6bn.

It was the lowest monthly total since February 2001, and 16.1% lower than for October 2009.

Although net mortgage lending was up 3.5% by value  – a rise of £1.7bn – compared with October 2009, numbers of approvals for house purchase continued to slide, to their lowest level all year. The figure stood at 30,766, compared with 31,058 in September and 33,914 in October last year.

The average value of house purchase approvals was £144,900, 2% higher than a year ago.

Remortgage levels stood at 24,112, marginally up from September (23,797) and higher than October last year (22,573).

Yesterday’s gloomy figures from the British Bankers Association caused few surprises.

Chris Gardner, a director at independent mortgage broker Obligo, said: “In recent months there has been a steady but very noticeable decline in the number of mortgage applications.

“People are concerned about their livelihoods and in many cases not even bothering to apply for a mortgage, as they feel their chances of getting accepted are just too slim. This is particularly the case with people in need of higher LTV loans.”

David Newnes, estate agency managing director of LSL Property Services, said: “Those of us who have been concerned about the availability of mortgage finance will get little comfort from the BBA figures.

“Demand for mortgages is likely to remain sluggish, as household incomes fail to keep pace with inflation. This will keep a lid on aspirations among would-be buyers, and when interest rates rise, probably in the first quarter of 2011, the pain for households will increase.  We can expect mortgage lending to remain slow well into 2011.”