Gross mortgage lending falls by 19% in May

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by Kay Murchie

Figures from the Council of Mortgage Lenders (CML) show that in the 12 months to May, gross mortgage lending fell by 19%.

First-time buyers are struggling to secure loans as lenders tighten their lending criteria and are demanding huge deposits. The CML said the average deposit paid by first-time buyers rose to 13% in April - this represents the highest level in over 3 years.

According to the CML, re-mortgaging remained strong, indicating that existing homeowners are supporting the market.

Gross mortgage lending reached an estimated £25.5 billion, signalling a 19% decline when compared with May last year, when it totalled £31.5 billion.

The figure is also down 2% from £26.1 billion lent in April, indicating the worst of the credit crunch is not over.

Michael Coogan of the CML said the re-mortgage market remains on target to meet our forecast for growth this year. This demonstrates the resilience of the market despite the recent doom and gloom.

Mr Coogan concluded by saying they await the first signs of the Bank of England’s Special Liquidity Scheme indirectly which has been designed to ease the current deadlock.

Halifax and Bank of Scotland owner HBOS, has reviewed its house price fall predictions and said property values will fall by 9% this year. It had previously predicted that the fall would be a mid-single digit.