Record low for bank mortgages

Posted on 24 January 2008

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The number of new mortgage loans made by high street banks fell to a record low in December, figures published today show.

Data from the British Bankers' Association (BBA) reveal that banks made 42,088 loans to homebuyers in the month, the lowest figure since records began in 1997. At £15.1 billion, gross mortgage lending was down from November's £16.5 billion, and 22.2% lower than 12 months previously.

However, there was a small increase in the value of mortgage approvals – loans agreed but not yet made – suggesting that the market may pick up a little in the new year.

"Mortgage lending weakened notably in the second half of 2007 as the credit crunch impacted on banks' ability to lend," said BBA statistics director David Dooks.

"At the same time, demand for mortgages also softened in the face of increased borrowing costs and lower disposable income. The combination of these factors is resulting in the marked market slowdown and weakness in house prices we are now seeing."

Commenting on the figures, Howard Archer of Global Insight said: "This adds to the already intense pressure on the Bank of England to cut interest rates in February, and to enact significant further reductions thereafter."

The Bank will announce its next interest rate decision on 7 February.

Category: Mortgages, Property, Regulation

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