Mortgage lending lowest for ten years

Mortgage lending dived to its lowest level for a decade during September as activity in the housing market remained subdued, figures showed today.

Net lending, which strips out redemptions and repayments, was just £1.6 billion during the month, well down on the previous month's total of £2.5 billion and the lowest figure since October 2000.

Lending showed little sign of picking up in the near future, with the number of mortgages approved for house purchase dropping for the fourth consecutive month to hit an 18-month low, the British Bankers' Association said.

The BBA figures come a week after the Council of Mortgage Lenders said total advances during September had fallen to their lowest level for the month for a decade.

The BBA said the muted net lending figure reflected the fact that gross lending remained subdued, with only £8 billion advanced during the month, the lowest level since May 2009 and 11% down on September last year.

At the same time, it said banks were encouraging customers to pay down their mortgages, contributing to the ten-year low for net lending.

Demand for mortgages remains muted as low interest rates put people off remortgaging, while potential buyers sit on their hands until the outlook for both the property market and the wider economy becomes clearer.

But the number of properties being put up for sale has increased in recent months, putting downward pressure on house prices.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The BBA data showing mortgage approvals sinking to an 18-month low in September puts further downward pressure on house prices.

"It reinforces our belief that house prices will trend down over the final months of 2010 and in 2011 to lose around 10% in value.

"In our view, the housing market has got very little going for it at the moment, apart from low mortgage rates - and that is if you can get a mortgage."

Demand for unsecured borrowing also remained muted during September.

Credit card borrowing increased by £200 million during the month, but this was offset by a £200 million contraction in the amount owed through loans and overdrafts.

As a result, the amount of money owed through consumer credit was unchanged, in line with August.

Consumers' cautious approach was reflected in a further rise in savings levels, with people increasing the amount they had deposited by £2.7 billion, well up on the recent six-month average of £1.7 billion.

PROMOTED VIDEO
Life and Style
food + drink
Life and Style
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
fashion
News
news
News
people
Travel
Warner Bros released a mock-up of what the new Central Perk will look like
travel
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
News
i100
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Quantitative Risk Manager

    Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

    COO / Chief Operating Officer

    £80 - 100k + Bonus: Guru Careers: A COO / Chief Operating Officer is needed to...

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    Day In a Page

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments