2008 mortgage lending lowest in six years

According to a new report from the Council of Mortgage lenders, mortgage lending during 2008 in the UK fell to the lowest level since 2002.

According to the report, mortgage lending in 2008 totalled £256.4bn last year, 30% lower than the 2007 total of £363.7bn.

The effects of the credit crunch have made it more and more difficult for borrowers to obtain mortgage finance as banks curb lending and the mortgage market dried up.  Combined with the falling housing market, low consumer confidence and growing unemployment, people simply are not borrowing or buying.

Experts predict that lending will continue to decline over the coming months, which will lead to mortgage lending remaining low until at least the second half of 2009.

Last week the government revealed new plans to help jump-start the mortgage market by guaranteeing lending and insuring banks’ debts.

Michael Coogan, general director of the Council of Mortgage Lenders, welcomed the Government’s plans, saying,

“This week’s package of measures to support the financial system and invigorate new lending was an essential move by government. The next challenge is to settle the detailed requirements for each measure, so that they can be used by as wide a range of market participants as possible, and as soon as possible.

“A mortgage market solely funded by a few large backs and building societies would be unlikely to have the capacity to match future consumer borrowing demand, or be an competitive in the long term as the UK market has been before the credit crunch. Increasing the range of active lenders and funding capacity in the market overall is a vital next step.”