CML: Mortgage lending plummets 10% on month

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by Kay Murchie

The Council of Mortgage Lenders (CML) has today announced a fall in mortgage lending for the month of November.

According to the CML, UK mortgage lending fell by 10% in November compared with October and was the lowest level since May.

The Council said gross mortgage lending totalled an £12 billion during the month, down from the £13.3 billion in October and a fall of 14% on the £13.9 billion in November 2008.

While the CML acknowledged that a seasonal decline is traditionally seen between October and November, a 10% fall was larger than normal.

Commenting on the figures, CML economist Paul Samter said: “There is little reason to expect much underlying change in the coming months.”

“There could be a modest decline in underlying house buying activity in early 2010 due to the stamp duty holiday ending, with activity bunching over the last few months of 2009,” added Samter.

Meanwhile, remortgaging activity continued to remain at low levels, as a result of the low interest rate environment, said the CML.

In related news, figures published by the National Association of Estate Agents (NAEA) this week revealed that the proportion of first-time buyers purchasing property in November fell to its lowest level for a year.

According to the NAEA, 19% were first-time buyers in November - down 3% on October and the smallest proportion since November last year.

However, in May, first-time buyers accounted for 45% of agreed sales.

First-time buyers have always been a crucial part of the housing market and during the decade-long property boom, this group of buyers were able to get mortgages of up to or near the full asking price of the property.

However, the credit crunch put an end to that and figures show that first-time buyers still require an average deposit of 25%. Therefore, many are finding it very difficult to get onto the property ladder unless they have a hefty deposit.

Furthermore, first-time buyer numbers are expected to dwindle even further since the temporary stamp duty holiday ends on 31 December 2009.