Mortgage lending falls further

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by Kay Murchie

The latest figures from the Council of Mortgage Lenders (CML) have revealed a further fall in gross mortgage lending.

The new figures show gross mortgage lending fell to an estimated £23.8 billion in June, down 3% from May and 32% lower compared with the same month a year ago.

Commenting on the figures, Michael Coogan of the CML, said borrowers on tight budgets must plan ahead as the trend is expected to continue.

This is traditionally a busy time for mortgages as people look to move during the summer. However, as house prices continue to fall, many are likely to be waiting to see what happens in the market before they move house.

Earlier this week, the CML announced plans for UK banks and building societies to offer new mortgages, in a bid to kick-start the mortgage market.

The Council said it wants the Bank of England to guarantee a market in mortgage-backed securities and covered bonds.

As a result, funds would be pushed back into mortgage lending by encouraging investors to buy mortgage-backed securities.

Also this week, the Government announced plans for a new scheme called ‘Rent to Home Buy’ which is hoped to increase the housing supply and help first-time buyers get onto the property ladder.

Under a pilot scheme, households earning below £60,000 per annum will be able to ‘rent first and buy later‘, with properties initially let for at least 20% less than the market rate.

Other plans being outlined include the location of new local housing companies which would see councils and developers using surplus land for homes.

The Rent to Home Buy scheme is to be implemented following falling property prices and the mortgage drought which has meant first-time buyers have been unable to purchase a home. It is hoped that the scheme will enable 75,000 onto the property ladder.