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Mortgage lending down 12% in April

Gross mortgage lending declined to an estimated £10.2bn in April, down 12% from £11.6bn in March and 1% from £10.3bn in April 2009, according to new data from the Council of Mortgage Lenders.

This is the lowest April total since 2000 when gross lending was £9.3bn.

The CML says a slight seasonal decline was expected as Easter fell in April this year and gross lending remains broadly in line with its forecast for lending of £150bn for 2010 as a whole.

The trade body notes that there have been signs of increased mortgage availability in recent months with higher LTV mortgages becoming available and rates falling slightly.

But it remains a difficult market, particularly for first-time buyers without large deposits, and lenders continue to face funding challenges.

The CML says that the imminent fiscal squeeze will drag on the speed of the recovery, which in turn will slow the pick up in the housing market, although the Bank of England’s welcome of the plans to address the public finances is likely to mean that interest rates can remain low for longer, which will help to support the market.

Michael Coogan, director general of the CML, says: “We welcome signs in the coalition agreement that some housing priorities are on the government’s radar. But 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.”

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  • John Gilbert 22nd May 2010 at 12:34 am

    Unlike last Spring when mortgage demand according to the quarterly GfK/JGFR Financial Activity Baromoter soared, this spring mortgage demand is near a recrd low reflecting many of the comments made.

  • Paul SIlcox 21st May 2010 at 3:37 pm

    spending equity in the house also leads to pulling forward demand from the future; ever increasing spending in the future require ever-increasing credit (known as a ponzi scheme). Now there is no credit, demand was pulled forward via credit purchases, and has disappeared with the credit. Gov has tried to stimulate credit flow but has run out of money. Now the bill is due. Debt deflation is here for a long while

  • Paul 21st May 2010 at 2:45 pm

    Rightly or wrongly, when people have equity in their properties they often view it as stored cash and as a result will remortgage to buy new cars, holidays, home improvements, or just have spare cash in the bank. This is all pumped back into the economy as it was in the boom years. Over a 5 year period we had Mr and Mrs Average Joe trading up their Focus for a BMW, and swapping Majorca for the Maldives, all paid for by the ‘money the house owed them’ Equity gives a feel good factor which leads to happy spending people.

  • Paul Silcox 21st May 2010 at 1:41 pm

    I am sure that you guys would see loads more business if house priced corrected. As for the UK housing market “being” the economy, it is in fact the biggest drain on the real economy. Lower house prices = lower living costs = competitve wages = UK economy being competitive.

  • Paul 21st May 2010 at 10:50 am

    Anonymous | 21 May 2010 10:41 am
    Another example of no idea of funding prices. Banks cannot lend at BBR as they cannoy buy funds at BBR. Even the hated banks need to make a profit. How many brokers would work for free? Thought so, so why should the lenders?

  • Ketan 21st May 2010 at 10:41 am

    @ Matt: Matt | 21 May 2010 10:13 am

    I agree…

    dont forget to add:

    Tracker rates at crazy margins above 75% LTV

    Fixed rate offering in line with a BBR @ 4%

    Mortgages refused for one late payment on a credit card.

    BTL at max 75% LTV (if you qualify for rental calculation)

    Mortgage lending will fall further – why? because your average family / homebuyer dont have such huge deposits and bank of mum & dad is bust – along with UK – BUST.

    I’m shutting up shop soon, I could earn more and keep my sanity being a wedding photographer!

  • Matt 21st May 2010 at 10:13 am

    So where are we then

    LTV’s restricted
    FSA bans self cert
    Valuers making bizarre down valuations
    Insane credit scoring
    Self employed battle to get even decent mortgages and remos
    Building Societies have to find more money than banks to lend

    Result : Mortgage lending down. Don’t care what your seasonal adjusting indicates because……….

    NO ONE CAN BORROW ANY MONEY !!

    Sorry about the rant, just had to get it off my chest

  • William Kingsley 21st May 2010 at 10:07 am

    None of these figs should be a surprise to anyone in the business. March’s high figure was pent up demand caused by the terrible weather in Jan/Feb. People couldn’t get out to view properties in these months and therefore March was a decent month for a broker. The column is correct about the issue being 1st time buyer mortgages as this has been the case for some time and until someone is able to fix this gap in the market with generally available 95% mortgages at sensible rates then the market AND the economy will continue to stutter. The housing market drives the UK economy.