Mortgage lending at lowest for a decade

Mortgage lending figures out this week show that with a first quarter estimate of £29.5bn, the UK had the lowest quarterly level of lending for ten years – since the first three months of 2000.


This was despite a 24% bounce upwards in lending between February and March. Lending rose from an estimated £9.3bn to £11.2bn.


However, overall, the first quarter of this year saw a 24% decline from the fourth quarter of 2009 (£38.9bn) and a 9% decline from £32.4bn in the first three months of 2009, according to the Council of Mortgage Lenders.


The CML’s economist, Paul Samter, said that a gradually improving economic backdrop and low interest rates should mean a “gentle improvement” in the market later this year.


But James Moss, director at Curzon Investment Property, said: “Lending may have increased when comparing March and February, but let’s not kid ourselves this represents a recovery. We have the lowest quarterly lending for a decade, so comparing the last two months is like saying a broken arm is better than a broken ankle – both are pretty painful.


“It is clear that the numerous government initiatives we have heard so much about have done very little really help. Mortgage lending is the core driver of the housing market. Without access to affordable finance, it doesn’t matter what gimmicks ministers bring in. Stamp Duty holidays mean nothing if you can’t raise the deposit to get a mortgage.


“The real threat, however, is that the dire situation could worsen next year when lenders have to start repaying the government for the big bail-out. This could mean an even tighter supply of financing which, combined with higher interest rates, could cripple the market further.”


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