Decline in mortgage lending continues

Posted under General by Jermaine

Mortgage lending figures released by the Council of Mortgage Lenders (CML) indicate continuous fall as number of home loans extended in November 2008 sharply declined by 60% when compared with November 2007.

Number of new loans availed by the new borrowers was 33,000, around 17% less than number of loans granted in October 2008. Those needing bad credit loans stand little to no chance of success at this time.

First-time potential buyers, waiting to own property while prices are plummeting, are reluctant to apply for loan due to demand of hefty deposits by the mortgage lenders.

The average amount of deposit required for purchase is 18% of property’s value which is highest ever demanded by lenders in the last three and a half decades.

CML is predicting a further fall in coming months due to inadequate mortgage funding until the government takes fresh steps to ease lending. Despite this, it is thought bad credit loans will be non-existent for some time yet.

The number of re-mortgage deals also dropped by 25% to 52,000 in November as compared to October 2008 and 36% when compared with November 2007.

Michael Coogan, director general of CML, has a word of advice for borrowers. He suggests them to take advantage of interest cuts, and to those benefiting from lower rates he advises to pay more to clear their loans.

The Bank of England has slashed interest rates from 5% to 1.5% since October 2008.

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