There were 35,000 loans for house purchase worth £5 billion in September, down 15% in volume and 15% in value from August, and less than half September 2007 levels.
Meanwhile there were 62,000 loans for remortgage worth £8.5 billion in September, down 15% in volume and 16% in value from August, but still around two thirds of September 2007 levels.
On a positive note the temporary increase in the stamp duty threshold saw 51% of homebuyers avoiding stamp duty in September, compared with 22% in September last year.
First-time buyers in September borrowed an average of £104,500, down from £108,000 in August. The amount borrowed has been steadily declining since peaking at £119,250 in July 2007. This has brought the average first-time buyer income multiple down to 3.18, its lowest level since March 2006. But first-time buyers have been continuing to put down larger deposits (16% in September) and fewer of them are entering the market – only 13,400 in September, down from 28,200 in September 2007.
There were 21,500 loans to home movers worth £3.4 billion, a decline of 59% in volume and 61% in value from September 2007. The typical home mover borrowed 71% of the property’s value and 2.82 times their income, compared with 72% and 3.02 a year ago.
CML director general, Michael Coogan, said: “While house purchase activity has reached exceptionally low levels, it is encouraging to see transaction costs lowered for a larger proportion of borrowers. The government should consider what other measures can be brought forward to enable the market to transact more easily.
“Banks and building societies do want to support homeowners, but they have limited funds available and are, quite reasonably, taking a prudent approach to risk. If the pricing and volume of interbank lending continues to improve, this should help the flow of mortgage lending.”
Commenting, Simon Rubinsohn, RICS chief economist said: “The latest CML data very clearly demonstrates the continuing squeeze on mortgage lending. However it is encouraging that the temporary increase in the stamp duty threshold does appear to be encouraging some new entrants into the market. Buyer enquiries, having edged up further in the October RICS survey, should get a further boost from the latest reduction in interest rates. On the basis of this, it is not unreasonable to conclude that transaction levels are now pretty close to a floor. Nevertheless, prices are likely to continue to weaken for some time to come with rising unemployment increasing distress selling and in the process raising the inventory overhang of unsold properties.”