Sharp drop in mortgage lending for September
According to the latest figures released by the Council of Mortgage Lenders September saw a sharp drop in mortgage lending, which many experts state is yet another sign that the housing market is cooling down.
This comes shortly after reports that the number of mortgage applications being rejected by lenders has soared over the past six months, with many lenders introducing more stringent borrowing criteria in a bid to cut back on the risks of bad debts in light of the current credit crunch that has taken effect in the UK and worldwide.
Mortgage lending fell by around 12% last month according to the figures, with the £29.96 billion worth of home loans reflecting a fall of £4 billion on August's figures. Experts state that this time of year is always a quieter period in the mortgage lending sector, but the drop of 12% was well over double the usual fall of 5% for this time of year. The credit crunch combines with the series of five interest rate rises that have taken place since August 2006 have seriously affected mortgage lending, state officials.
The drop in lending has been put down to a combination of tighter lending regulations from lenders, who don’t want to take any unnecessary financial risks, and a reduction in the number of consumers that can afford to get onto the property ladder given the value of properties and the current high interest rates. Many lenders have also taken many of their mortgage products off the market altogether, with bad credit consumers being worse affected in terms of accessibility and affordability.
One official from the Council of Mortgage Lenders stated: 'We have been expecting a slowdown in monthly lending levels in line with interest rate rises. In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as rate effects are exacerbated by the recent liquidity problems in the mortgage market.'
29th October 2007