Mortgage lending down 5%
Thursday 19 July 2012
Mortgage lending fell by 5% last month as the “subdued” housing market reflected the wider weaknesses in the economy, lenders said today.
Some £11.9 billion was lent in June, a 5% fall month-on-month and year-on-year, as a "see-saw" effect caused by the ending of a stamp duty concession for first-time buyers continued, the Council of Mortgage Lenders (CML) said.
Lenders have been tightening their borrowing criteria in recent months and raising their rates, blaming the increased cost of funding a mortgage.
CML chief economist Bob Pannell said: "Weaker mortgage lending in June points to a more subdued tone for the housing market in line with that for the wider economy."
But he said the "funding for lending" scheme announced by the Bank of England and the Treasury will help to guard against the market shrinking back further.
Gross mortgage lending in the second quarter of this year stood at an estimated £34.2 billion, making it 3% higher than it was a year ago.
There have been some signs of increased competition to attract customers with larger amounts of equity, but would-be buyers with low deposits are expected to have a particularly tough time finding a deal in the coming months.
HSBC recently launched a five-year fixed deal with a record low rate of 2.99%, for example, but borrowers would need a hefty 40% deposit to take it up.
The British Bankers' Association (BBA) recently reported that mortgage repayments outstripped lending for the first time in May as households focused on paying down their debts.
Net mortgage lending declined by £73 million, the first reversal in the 16 years that records have been compiled by the BBA.
The number of mortgage approvals for house purchase also slumped to its lowest level in 13 months, according to the BBA's figures.
The CML records advances, which happen a couple of months after approvals, mean the BBA's report could be a sign of what is to come.
Elsewhere in the report, figures showed a fall in lending to small and medium-sized enterprises, while credit availability was broadly unchanged for businesses, according to respondents to the Bank's Credit Conditions Survey.
The Bank said credit was normally available for firms with strong balance sheets, while some smaller firms reported they were still often unable to secure loans.
The major UK lenders said demand from small and medium-sized enterprises remained subdued, the Bank added.
John Cridland, CBI director-general, called for rules on protective cash buffers to be relaxed to help unclog lending to businesses.
He said: "With lending levels falling and prices rising, we need immediate action to boost lending in the economy to help growth.
"The Government has this week announced good initiatives to boost exports, and the Funding for Lending scheme should help lower costs, but action on liquidity buffers would have most impact now.
"The Treasury and Bank of England have signalled a willingness to relax liquidity rules, but the FSA needs to drive forward with these changes immediately so that banks can release funding into the economy."
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Simon Read: Timeshare owners accuse Macdonald Resorts of land grab
Donald MacInnes: Let's pretend Scotland won and now a salmon is running the country
Bargain Hunter: Win a new iPhone 6
More than 300,000 adults are too deeply in debt to apply for bankruptcy
The HiFX guide to managing corporate foreign exchange and international payments
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 4 The response to my Pizza Express review has been overwhelming, and taught me a lot about journalism
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize