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APRIL MORTGAGE LENDING FALLS TO TEN-YEAR LOW (Buying)
by administrator 
, Monday, May 24, 2010, 06:57
Mortgage advances during April fell to their lowest level for the month for 10 years, new figures have revealed.
Lending slumped to £10.2 billion during the month, 12 per cent down on March's figure and the lowest level recorded for April since 2000, according to the Council of Mortgage Lenders.
The group said it had expected a slight seasonal decline during the month due to Easter falling in April this year.
The figure includes people who are buying a new home and those who are remortgaging, so it is likely to have been suppressed by the low level of homeowners who are switching to a better deal.
But total lending levels still remain well down on the £13.6 billion advanced in December, when people buying lower value properties rushed through transactions to beat the end of the stamp duty holiday.
Despite the dip in activity during the first four months of the year, the CML said mortgage advances still remained broadly in line with its forecast of gross lending of £150 billion for the whole of 2010.
The group said there had been signs of increased mortgage availability in recent months, with more loans becoming available to people with only small deposits, while rates had also fallen slightly.
But the CML said it still remains a difficult market, and lenders continue to face funding challenges.
The group warned that the imminent fiscal squeeze would drag on the speed of the recovery, which would also slow down the pick-up in the housing market.
However, it added that the Bank of England's welcome of the new Government's plans to address the public finances suggests that interest rates are likely to remain low for longer.
But the CML continued to express concern about what would happen as Government support for the mortgage market is withdrawn.
Michael Coogan, director general of the CML, said: "We still do not know how the incoming Government plans to address the funding gap looming over the next few years in the mortgage market.
"It is important that the new Government grasps this nettle. Unless funding issues are addressed, any recovery in lending may well be curtailed as the repayment date on the support schemes gets closer."
