Gross mortgage advances in October were an estimated £12.4 bn, unchanged from September but down 9% from £13.6 bn in October 2009, according to lender data.
The CML said these are the lowest October lending figures for ten years since lending fell to £9.9 bn in 2000.
The month-on-month annual comparison is likely to fall further, said the trade body, because lending volumes rose sharply in the latter part of 2009 as borrowers rushed to take up the Stamp Duty concession before the end of the year.
Wyles predicts mortgage lenders will advance £137bn in gross lending, or £9bn net lending by the end of 2010. This compares with nearly £143 bn in 2009 and just over £254 bn in 2008.
Jonathan Moore, director of Easyroommate.co.uk said: “The mortgage market hasn’t just stalled – it’s in reverse. Banks and Building Societies are looking nervously towards their balance sheets as they consider future repayments for government bail-outs, and new lending has slipped far down the agenda. But it should not be forgotten. Achievable mortgage finance for first-timers remains the key ingredient to re-starting the property market’s recovery.”
In its monthly News and Views newsletter, the CML said the relatively low levels of repossessions still marked a step change between this downturn and the early 1990s.
“This reflects the significantly lower incidence of job losses and, in particular, the marked difference in the path of interest rates,” it said.
“The Bank of England’s November Inflation Report implied that interest rates would remain at relatively low levels for some time yet. The Bank’s forecasts predict a steady, but modest, growth in output with inflation expected to remain below its 2% target rate through 2012 and 2013.”
With interest rates rising only slowly and little change in the level of unemployment, as long as the private sector expands to offset public sector job cuts, arrears will remain well below previous peaks, it said.
