Mortgage lending drops 14 per cent
This was down 14% from £13.3 billion in July and 6% from £12.1 billion in August 2009.
It is the lowest August total since 2000 (£11.1 billion). The CML believes that lending volumes are likely to remain below last year’s level in the coming months as activity was buoyed by the upcoming end of the stamp duty holiday in the last few months of 2009.
Commenting, CML chief economist Bob Pannell said: “We face the prospect of a difficult second half of the year. However, the Bank of England is likely to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers.”
Brian Murphy, head of lending at independent mortgage broker, Mortgage Advice Bureau, said: “Mortgage activity almost always falls August on July due to the summer holidays but the decline this year is certainly larger than we would expect on seasonal factors alone.
“Public sector cuts, tax hikes and incessant doom-mongering about a double-dip recession is hitting consumer confidence hard.
“The fact that lending was higher last August when we were still in recession will add to concerns but the property market then was still in the early days of its revival and confidence was higher.
“A year ago we were in recession but the overall feeling was that we were leaving it. Now, we are out of recession but the feeling in many corners is that we are heading back into it.
“We should have a much clearer picture as to how the mortgage market is likely to perform for the rest of the year and in 2011 once the Coalition Government announces its Spending Review next month, and many prospective buyers are likely to wait until the details of the review are published before they make a decision on whether to burden themselves with more debt.”