Sharp decline in lending figures

Compared with August, gross mortgage lending fell to an estimated £30 billion. Although lending was up 2.5 per cent on the £29.2 billion figure for September 2006, the annual increase is the lowest percentage increase in two years. The figures are not seasonally adjusted.

While lending typically falls between August and September, a 12 per cent reduction is larger than the norm of around 5 per cent. This easing in the market is another sign of the expected consumer response to the five interest rate rises experienced since August 2006.

Commenting on the data, CML director general Michael Coogan said: "We have been expecting a slowdown in monthly lending levels in line with interest rate rises. In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as rate effects are exacerbated by the recent liquidity problems in the mortgage market."