Mortgage lending down in August

Gross mortgage lending fell by six per cent last month, the Council of Mortgage Lenders (CML) has said, down to £32.2 billion from £34.1 billion.

This figure, while six per cent down month-on-month, fell by three per cent year-on-year, and does not take into account the effects that the credit crunch has had on the market.

However, the CML has suggested that lending may well remain strong in September, with some lenders have reduced their fixed-rates in response to the crisis.

"We see no obvious decline in consumer demand, although some decrease in the supply of lending is being experienced in the short term as a result of the problems lenders face in raising wholesale funding," commented CML director general Michael Coogan.

"The events of the past week have shown us how very quickly situations can change. Even after the good news on inflation falling back, the Fed's rate cut, and the Bank of England's support for 3-month funding, it is not a given that the Bank will follow suit on cutting rates.

"It makes sense for consumers to continue to plan for rates at or about their current levels for the foreseeable future - we are not out of the woods yet," Mr Coogan concluded.

The British Banking Association (BBA), meanwhile, has reported that net mortgage lending rose by £6.1 billion in August.


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