Mortgage lending last month fell to its lowest April level for 10 years, figures from the Council of Mortgage Lenders reveal.
Gross mortgage lending dropped 12% from £11.6bn in March to an estimated £10.2bn in April, although the CML says April’s lending figure remains in line with its forecasts for £150bn of lending for the year.
Michael Coogan, director-general of the CML, says that despite the coalition agreement the government has still given no word on how it plans to tackle the dearth of funding.
He says: “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 support schemes gets closer.”
The CML says there have been signs of increased mortgage availability in recent months with higher LTV deals coming to the market.
But a report from the Bank of England says that although there are more products, this has not helped boost either credit availability or demand.
The report says that despite an increase in the number of products at LTVs between 75% and 89%, the proportion of loans advanced at LTVs above 75% has broadly stayed the same since spring 2009.
Some lenders have told the Bank that competition in the market was pushing rates down, with two-year fixed rate deals at 75% LTV currently at their lowest level since records began in 1995. Yet rates for two-year fixes at 90% LTV have stayed the same since the start of the year.