Home loans at lowest level for 12 years

Permalink: Home loans at lowest level for 12 years
by Kay Murchie

According to the Council of Mortgage Lenders (CML), the number of new mortgages approved for homebuyers fell to 62,000 in the last three months of 2007.

The figure was 35% lower compared with the same period 12 months ago and the lowest level for 12 years sparking fresh concerns of the state of the property market.

A spokesperson for the CML said that lenders were facing the toughest period since the back end of the 1990s property crash, saying funding problems in the wake of the credit squeeze and a seasonal lull had hit at the same time.

The spokesperson added that things should become easier for homebuyers this year. Affordability has been stretched further in 2007 but the latest round of interest rate cuts and the expectation of further cuts this year will ease debt servicing burdens throughout 2008.

For first-time buyers, the combination of subdued house price inflation and lower mortgage rates means affordability should ease gradually as the year progresses, added the spokesperson.

The CML added that December’s loans for home purchase were 22% below November’s 78,000 due to aspects such as lenders tightening their lending practices and the launch of Home Information Packs.

Figures from the CML also revealed that the number of people re-mortgaging has fallen sharply. There were just 59,000 such mortgages granted in December 2007, the lowest figure for any month for 6 years.