Lenders still hoping for help as home loans slump

Economy: Mortgage advances down 43% but personal borrowing continues to grow

The housing market's relentless downward slide was underscored yesterday after figures were released by building societies showing that the value of loans they made dropped by 43 per cent over one month.

The pounds 729m of net advances last month compared with pounds 1.27bn in June. The figure was 37 per cent down on the same period last year.

Building societies' dismal lending results came as Britain's banks released figures yesterday showing they lent a total of pounds 367m to mortgage borrowers last month, itself the lowest amount since September 1992.

Adrian Coles, director general of the Council of Mortgage Lenders, said: "The low levels of activity reported by estate agents, along with continued house price falls, underline the enduring malaise in the housing market.

"A commitment to homeowners from the Government would help to restore some of the confidence required for a recovery in the market."

Building Societies' provisional loan commitment numbers, stood at 43,000 in July, down from 54,000 in the same month last year.

Although this total is sometimes revised upwards, the final June figures, also released yesterday, showed a 20 per cent drop, down to 50,000 from the 60,000 recorded in the same month last year.

The BSA's figures indicate that the vast majority of loans made in July continued to be for remortgages, as lenders competed with each other to "churn" borrowers. Gross mortgage lending, at pounds 3.2bn in July, was more than four times the figure for new home loans.

Michael Saunders, an economist at Salomon Brothers, predicted further gloom for the market. Figures he obtained from the Central Statistical Office showed that the overall number of housing transactions for July, at about 95,000, was more than 10 per cent lower than at the same point last year. Mr Saunders said transactions had fallen to the "recession levels" last recorded in 1993.

"Housing turnover tends to lead trends in house prices and the weakness in turnover, coupled with soft figures for lending and mortgage commitments suggests that house prices will remain under pressure in coming months," Mr Saunders said.

"I am not saying that house prices will fall every single month but the general movement will continue to be downwards for some time to come."

A CML spokeswoman said mortgage lenders still hoped to persuade the Government to help revive the housing market: "Our impression is that when we talk to members of the Number 10 policy unit, we get a good response but that the Treasury are much more laissez-faire."

While lending remained weak, building societies continue to record large inflows of funds. July, with a total of pounds 956m, was the 13th month in a row to show a net increase, even though there is usually a large outflow to pay for holidays at that time.

The BSA denied that one reason for the large increase had been the huge numbers of speculative accounts being opened last month to take advantage of potential de-mutualisations.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m