Page last updated at 10:09 GMT, Thursday, 15 January 2009

Mortgage lending still falling

For Sale sign
There will be even fewer mortgages lent in the coming months, lenders say

New mortgage lending continued to fall in November, according to the latest figures from the Council of Mortgage Lenders (CML).

The number of new loans granted was just 33,000 - 17% fewer than in October 2008 and 59% down from November 2007.

First-time buyers had to put down an average deposit worth 18% of their property's value, the largest for at least 35 years.

The CML predicted that lending would fall further in the next few months.

"Limited mortgage funding and reduced consumer demand will weaken lending activity further in coming months," said the CML's director general, Michael Coogan.

"The flow of funds to the mortgage market will not improve this year without further intervention by government," he warned.

Lower interest rates

The CML said many first-time buyers would continue to struggle to raise the money for such large deposits.

These are being demanded by lenders as a method of rationing their limited mortgage funds, and to protect themselves against losing money if borrowers default while house prices continue falling.

Mortgage costs have been falling in recent months, in the wake of the successive cuts in Bank Rate by the Bank of England.

And the lenders' organisation advised borrowers to take advantage of the new conditions.

"Borrowers who are benefiting from lower mortgage rates should overpay if they can afford it, to reduce their mortgage balance and protect themselves against falling house prices," Mr Coogan said.

"And now is also a good opportunity for borrowers on interest-only mortgages to switch to repayment mortgages, to use this period of low interest rates to start to pay down their loans," he added.

Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific