CML: Mortgage lending falls again in September

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by Kay Murchie

The latest figures from the Council of Mortgage Lenders (CML) show that gross mortgage lending continued to decline in September.

The CML said total lending in September was £17.7 billion, down 10% from the previous month and 42% lower than in September 2007.

According to the Council, the figures represent the lowest level of lending for any month since January 2005 and the lowest September figure since 2001.

New lending this year is expected to be only 37% of the level recorded during 2007, said the CML, due to weakening consumer demand and the continued tightening of lending criteria.

According to Michael Coogan, CML’s director general, gross lending in 2008 is estimated to be around £255 billion, compared with £363 billion in 2007, while net lending is estimated to be around £40 billion, compared with £108 billion in 2007.

Last week, a survey from the Royal Institution of Chartered Surveyors (Rics) revealed that estate agents sold, on average, less than one property per week each in September.

According to Rics, the number of properties being sold throughout the UK was the lowest since the survey commenced in 1978 and was 52% lower than in September 2007.

Earlier this month, the Halifax reported that UK house prices experienced a fall of 1.3% in September.

According to the Halifax, a further £2,000 has been wiped off the value of an average home, taking the average cost to £172,108, similar to the average price of a UK home in January 2006.

Finally, according to a report by credit ratings agency, Standard & Poor’s, tumbling house prices are pushing 60,000 homeowners each month into negative equity.

If the current pace continues, around two million households could find themselves in negative equity by 2010, according to economic forecasting agency, Capital Economics.