Page last updated at 09:22 GMT, Tuesday, 8 April 2008 10:22 UK

Mortgage lending hits 16-year low

Sale signs
The property market has shrunk dramatically in the past few months

The number of mortgages being lent for house purchase has slumped to its lowest level for 16 years, according to the Council of Mortgage Lenders (CML).

There were just 49,000 loans made to home buyers in February, 3.5% lower than in January and 33% down on February last year.

Loans for house purchase made up only 30% of all mortgage lending, the lowest proportion on record.

The CML blamed the credit crunch, which it said would restrict lending further.

'Shrinking business'

Michael Coogan, director general of the CML, said the February figures reflected transactions that started several months ago, so the situation was likely to get worse.

"More recently, there has been consistent evidence of tightening in lending criteria which will lead to shrinking pipelines of new business as the recent Bank of England's credit condition survey made clear," he said.

"We expect this process of further tightening in lending criteria to continue in the second quarter as lenders respond to the challenging market conditions," he added.

The CML's mortgage figures for the three months to February, at a combined 163,000, are the lowest for any quarter since early 1992 during the depths of the last recession.

There were just 18,000 loans to first-time buyers in February, the lowest figure since monthly records started in 2002.

And the level of first-time lending to home buyers over the past three months is now at its lowest since the first quarter of 1975.

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