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Warning over job losses after 'train crash' lending figures

22 September 2010
Written by rosalind renshaw

Frustration and dismay has greeted the news that mortgage lending levels last month were the lowest in ten years, with the Business Secretary Vince Cable saying: “There is a potential train crash ahead.”

One expert predicted inevitable further job losses in the financial services industry and another said that the lending drought could be worse next year.



Mark Blackwell, managing director of software supplier xit2, said: “It’s difficult to see any upside in numbers for the foreseeable future.  

“Before we get anywhere near the market returning, there’ll be more pain for those in work, which will include putting many of those who are in it, out of it.”  



According to the Council of Mortgage Lenders, gross mortgage lending declined to an estimated £11.4bn, down 14% from £13.3bn in July and 6% down from £12.1bn in August 2009 when Britain was still in recession.

This is the lowest since August 2000 when lending stood at £11.1bn.

CML chief economist Bob Pannell warned: “We face the prospect of a difficult second half of the year.”



Paul Hunt, managing director of IT supplier Phoebus Software, said: “August’s seasonal lull in lending has been exacerbated by nervousness around the future of the economy and whether we are heading towards a double dip.
  
“But what is really incredible is that 82% of these mortgages came from just five lenders – a situation that needs to be rectified. The Government has to find a way of getting new lenders into the market. 

“Next year, some of these five lenders will be hampered by the new capital adequacy requirements for Basel III and the need to start paying back government funding. If there have not been significant improvements in the number of lenders in the market, we’ll be left with even more of a lending shortfall next year.”



Alan Cleary, managing director of Precise Mortgages, said: “This is bad news for the industry. We’re back to the glory days of the Blair government, the days when websites still felt exotic, and the Spice Girls were at the top of the charts. That’s bad enough. But worse still is the fact that back in 2000, the average price of a property was about half what it is today.

“It’s plain to see that housing transactions will remain subdued until the issue of mortgage funding is addressed.”

Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said: “Public sector cuts, tax hikes and incessant doom-mongering about a double-dip recession is hitting consumer confidence hard.

“The fact that lending was higher last August when we were still in recession will add to concerns, but the property market then was still in the early days of its revival and confidence was higher.

“A year ago we were in recession but the overall feeling was that we were leaving it. Now we are out of recession but the feeling in many corners is that we are heading back into it.

”

That feeling may have become more pronounced with news that bank lending levels to small businesses have contracted for the fifth successive month.

Comments

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    I am not in the least surprised that mortgage lending is at an all time low when the lenders insist that the best deals are when about a 30% plus deposit is paid. This is absolutely out of the question for first time buyers who are asked for around 15% as a deposit and then get penalised with a high interest rate which is being used to line the vaults of these legalised criminals. I am trying to buy a buy to let flat and the best deal I got was with a deposit of 45%. I am lucky in that I could raise this deposit but lenders wont lend to a FTB on a flat with less than 15% up front. Where is the sense in that. This is where the market can be made to perk up but the vandals with the money as sure as eggs are eggs have no brain between their ears to see how thing could so easily be improved in this business. Or is it that they don not have the money to lend but have not got the ba**s to stand up and be honest. Since only estate agents are bound by an act of parliament to be honest the rest of the people in the business can merrily go on just lying to the world and his brother.

    • 23 September 2010 19:26 PM
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    The financial institutions with a helping "turn a blind eye" by the regulators/labour government lead us into this mess, but we are left to sort it out. Impossible until someone takes those lenders by the throat who seem to have got away with it and make them pay ...... and they should be footing the bills for negative equity, as they first and foremost caused it, the markets followed but that was an inevitable ball gathering pace which no-one could stop but the chancellor of the day.

    And here we are today, the financial institutions doing what they were doing before it all started, "no you can't afford it so get lost". Is it a wonder why they aren't lending?

    • 22 September 2010 14:23 PM
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    " But worse still is the fact that back in 2000, the average price of a property was about half what it is today." Which is really where they ought to be now - there is no reason why they have stayed so high and in real terms when you take inot account the fall in sterling they have dropped more than stated - still loads more to come off - pathetic priced flats in provincical areas at £150,000 is out of reach for FTB and seasoned investors - only absolute idiots would be buing at the bottom end in this market - you would lose less money on buying a brand new car in this day and age - Oh and Vince Cable's PR might think they are being trendy using terminology like "train crash" blah blah but the metrics were always there to predict this and its an insult to british rail let alone real train crash victims - shameful and lack pf authority by inept war mongering governments (on both sides of pond) led to this - force the banks to either lend or start re-posseing in earnest to put the prices where they need to be and maybe transactions will improve for what they need to for everybodies sake in the UK -

    • 22 September 2010 11:50 AM
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