now 1.9p to buy20 Dec 2010 13:45
UK mortgage lending fell in November, says CML
Lenders believe that repossessions of homes will rise in 2011
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Mortgage lending fell 5% in November compared with the previous month and was down 10% on a year ago, lenders say.
Gross mortgage lending stood at an estimated £11.1bn - the lowest figure since April, the Council of Mortgage Lenders (CML) said.
It was also the lowest total in the month of November for a decade.
Lenders said the relatively low level of mortgage lending in the UK was likely to continue in 2011.
'Distortion'
The sharp drop compared with November 2009 was the result of a "distortion" in lending a year ago, the CML said.
A year ago there was a temporary lift in lending as buyers entered the market prior to the end of the stamp duty concession.
However, the CML said mortgage lending remained weak owing to a lack of interest from buyers and rationing of home loans from lenders.
"The fall in gross mortgage lending in November reflects the usual seasonal slowing of activity at this time of year, and reinforces the picture of a continuing flat market," said Bob Pannell, the CML's chief economist.
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It is difficult to see any significant change in this pattern of activity in the mortgage market in the short term”
Peter Charles
Council of Mortgage Lenders
Repossessions to rise say lenders
"Both demand for mortgage borrowing and the supply of funds for lending remain heavily constrained."
Future picture
The CML recently published its predictions for the mortgage market in 2011.
It offered little encouragement to potential first-time buyers struggling to get a mortgage.
Owing to the economic outlook, it also expected some who already have a mortgage to have some difficulty with repayments.
It predicts that there will be 40,000 homes repossessed in 2011, up from an estimated 36,000 this year.
"Given the unpromising economic background to the first half of next year, it is difficult to see any significant change in this pattern of activity in the mortgage market in the short term," said the CML's Peter Charles, in newly-published commentary on the market.
"The combination of pressures on households' real incomes, as the inflation rate remains above 3%, and the continuing uncertainty about job prospects, particularly in the public sector, will do nothing to bolster mortgage demand.
"Meanwhile lenders continue to face material uncertainties around the future availability and cost of funds to support retail mortgage lending.
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