Borrowing for home loans slumped 12 per cent in September, with members of the Council of Mortgage Lenders making advances worth £30bn less than in August. The CML said yesterday that while lending last month was up 2.5 per cent on September 2006, this was the lowest annual increase for two years.
The figures were echoed by the latest statistics from the British Bankers' Association, which also showed a slowdown in mortgage lending. The BBA also said unsecured lending, on credit cards, overdrafts and personal loans, slowed to a trickle during September.
The CML said while it was usual for mortgage lending to fall between August and September, the latest decline was more than double the typical reduction of 5 per cent or so. Mortgage lenders believe the figures represent further evidence of a marked slowdown in the housing market, particularly as they reflect the period just before the Northern Rock crisis. Michael Coogan, the director general of the CML, said: "In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as interest rate effects are exacerbated by the recent liquidity problems in the mortgage market."
David Dooks, the BBA's director of statistics, added: "Slightly lower mortgage lending in September followed on from fewer loan approvals in August, but the recent trend is little changed and consumer credit, despite a rare – for recent times – rise in card borrowing, remained very subdued."
Housing market analysts warned that even if the Bank of England cuts interest rates – as some economists now expect it to do before the end of the year – the property market slowdown is likely to continue.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: "The RICS expects activity to slow further into the new year, and 2008 will see a subdued market with little or no change in house prices."Reuse content