Home Loans Fall to Eight Year Low

Mon, 23 Mar 2009

New figures from the Council of Mortgage Lenders (CML) have revealed that home loans fell to an eight year low last month. Despite efforts from the government to kick start lending, gross mortgage lending fell to £9.9 billion last month, down by 15 per cent from the £11.7 billion lent in January. The figure represents a 60 per cent year on year decrease, and is the lowest monthly total since February 2001.

The decision of savers to deposit their money in the state-owned National Savings and Investments (NS&I) has been cited as one of the reasons for the continued contraction of lending, with high street banks losing out as a result.

Director General of the CML, Michael Coogan said, ‘Retail savings are now the predominant source of funding for mortgages . But banks and building societies have seen savings ebb away to National Savings and Investments, which has a negative impact on their ability to lend. This is yet another example of fractured policy. There are now fewer active lenders in the market, but the Government wants them to lend more. At the same time, the Government’s own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained.’
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