Mortgage lending down by half in a year

Gross mortgage lending dropped 51% in the last year, according to figures released today by the Council of Mortgage Lenders (CML).

The figure for November 2008 was estimated at £14.6bn, compared with £29.9bn in the same month last year. The figure was also 22% down from October 2008.

The CML said that while it is typical for lending to fall between October and November, the fall this year was especially large. It attributed this to lack of confidence in the economy and the continuing turmoil in the housing market.

CML director general Michael Coogan predicted that the housing market will remain subdued during the coming year, confirming previous estimates that net mortgage lending may turn negative for the first time.

“Repayment problems will worsen against the backdrop of rising unemployment, but lenders and government are working to try to reduce the negative impact on borrowers,” he said.

Coogan highlighted the importance of government intervention to support new lending, but stressed the need for this to continue throughout next year. He said: “2009 will be a challenging year, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates.”

The information released today shows a steady fall in gross mortgage lending since the third quarter of 2007, with November 2008 recording the lowest figure since February 2002.