Mortgage squeeze tightens further
July 19, 2008
The mortgage squeeze is continuing to tighten with a further drop in lending, according to new figures.
The fall in gross mortgage lending is accelerating, with a 3% dip from May to June, according to the Council of Mortgage Lenders (CML).
The CML said gross lending declined to an estimated £23.8bn in June, some 32% lower than the same month a year ago.
CML director general Michael Coogan said borrowers on tight budgets must plan ahead as the trend will continue.
Credit crunch
The more sturdy quarter-on-quarter figures show that lending declined by 1% from the first three months of the year to an estimated £74bn in April to July.
But spring and early summer are usually times when the housing market is more buoyant, with people more likely to look to move than in winter.
The quarterly year-on-year decline had accelerated, the CML said, with lending in the second quarter of 2008 down 21% on a year ago, after a year-on-year dip of 11% in the first quarter.
“Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand,” said Mr Coogan.
Lenders are taking fewer risks with lending, leading to more expensive mortgages and a demand for bigger deposits.
But the demand from buyers has also fallen as house prices drop. Many are likely to be waiting for a sign of property prices stabilising before they choose to move.
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