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Credit crisis reduces lending
20 June 2008 13:50
Mortgage lending in May fell 19 per cent from last year, a sure sign of the credit crunch deepening, according to the Council of Mortgage Lenders (CML).
Gross monthly lending fell last month to £25.5 billion, compared with £31.5 billion in May 2007. This 19 per cent drop included a two per cent fall from the £26.1 million lent in April.
The mortgage market is still awaiting the first signs of the Bank of England's special £50 billion liquidity scheme - announced in April – encouraging lenders to cut rates for their customers, which it hoped would ease the current logjam in financial spending.
CML director general, Michael Coogan, believed that house purchase activity would remain weak for the next few months as a result of these funding issues in the market.
Mr Coogan did however identify the re-mortgage market, which remains on track to meet forecasts for growth this year, as demonstrating resilience despite recent economic bad news.
This is further bad news for the economy after HBOS – which owns Halifax - yesterday unveiled the gloomiest forecast for house prices this year, as it predicted a fall of up to nine per cent.
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