Home Loan Lending Down by 90 per cent on Last Year

Wed, 04 Mar 2009

New figures from the Bank of England have revealed that net mortgage lending fell by 90 per cent in the past twelve months. The figure represents the amount by which lending exceeds redemptions and repayments, and stood at £6.91 billion in January 2008. However, last month, net lending stood at a paltry £690 million – the lowest monthly total recorded by the Bank since records began over 15 years ago.

The worrying figures aren’t as bad as those offered by the Building Societies Association, however. The BSA claims that homeowners repaid £491 million more than they borrowed in January. Despite estate agents reporting a modest rise in enquiries from potential buyers, it is feared that things may get worse due to a lack of home loan availability. The problems have been intensified by ailing house prices, with average price decreases of 20 per cent leaving some borrowers in negative equity .

Simon Rubinsohn, of the Royal Institution of Chartered Surveyors, blamed risk averse lenders . Mr Rubinsohn said, ‘This disconnect between buyer inquiries and mortgages approved highlights the inability of many buyers to access the property market at the present time because of the substantial deposits being sought by lenders.'
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