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September gross mortgage lending hits 10-year low, says CML
Gross mortgage lending totalled an estimated £12bn last month, the lowest September total since 2000, when it stood at £10bn, according to the CML.
Gross lending was down 1% from 12.1bn in August this year and down 7% from September 2009, when the total was £12.9bn.
In the third quarter of 2010, the CML estimated gross lending to be at £37.4bn, a 9% increase from the second quarter and down 4% from the third quarter of last year.
Michael Coogan, CML director general, said: “Lending volumes do not seem likely to increase substantially towards the end of the year. Funding pressures on lenders remain, and the practical implications of government and public spending cuts are beginning to emerge, having a direct impact on consumer confidence.”
Despite the pressures on government finances, Coogan argued that today’s comprehensive Spending Review is no time to make further cuts in state support for borrowers in difficulty.
He added: “Efforts by borrowers, lenders, the government and money advice agencies has helped to keep mortgage arrears and possessions in check during the current economic downturn. These support measures help contain the wider costs of homelessness, and deliver wider benefits to the government.”
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Brian Murphy, independent mortgage broker from the Mortgage Advice Bureau (MAB), said: “We knew it was going to be a quiet autumn in light of the Spending Review but this is worse than many had feared.
“Although there are some competitive products available at lower LTVs, the market as a whole is still very weak and is unlikely to improve in the current economic climate,” he added.
Jonathan Cornell, spokesperson for First Action Finance, said: “Continued funding constraint in the market coupled with nervous borrowers anxious about today’s Spending Review, are going to be put further downward pressure on house prices after Halifax’s reported 3.6% drop for September.”
David Whittaker, managing director of Mortgages for Business, argues that the government needs to do more to encourage lending.
He said: “The government has to take responsibility, as its about to flood the rental market having cut social housing. It needs to encourage lenders and landlords to increase activity. With lending now as low as in 2000 and house prices around double the value, we cannot continue like this.”