Mortgage lending nosedives 70%

Posted under General by Jermaine

The housing slump is worsening further with a 70% fall in mortgage lending in October. The Bank of England reported that its net lending, excluding repayments and redemptions, touched just £459m in October, the second lowest amount since 1993 when the Bank of England started collecting data.

The number of new mortgages was 32,000 in October against 33,000 in September. It is a disastrous showing when compared with 72,000 per month at the end of December 2007. During 2008 only 460,000 mortgages were approved compared to 1,098,000 approved over same period in 2007. Supply of lending to the market was choked off by the credit crunch and a decline in house prices at the rate of 15% per year has severely affected demand for mortgages.

According to chief economist, Simon Rubinsohn, at the Royal Institution of Chartered Surveyors, fall in inter-bank lending and interest rate cuts did not improve activity in mortgage market. First time buyers are unable to buy property since banks are still insisting for large deposits.

There is substantial increase in unsecured borrowing through credit cards, loans and overdrafts by £844m, up from September’s increase of £345m. This figure was less than 50% of £1.79bn borrowed in October 2007.