Mortgage market 'remains subdued'

Tuesday, August 12, 2008

The number of loans approved for house purchases in the UK in June fell to fewer than half the number of the same month a year ago, new figures show.

Some 47,000 home loans were approved compared with 98,000 in June 2007, and also down from 52,000 in May this year.

The figures from the Council of Mortgage Lenders (CML) show that the mortgage squeeze, caused by the credit crunch, is continuing.

The CML added that the slowdown in mortgage lending was likely to go on.

"The majority of lending continues to be to people with larger deposits, which is prudent for borrowers and lenders in a slowing housing market," said CML head of research Bob Pannell.

Deposits

The figures show that the average homebuyer put down a deposit of 22% in June. These new borrowers had an average age of 35.

Last month, and in June 2007, the average deposit was 20% showing that lenders are tending to favour safer borrowers.

This is the result of banks and building societies limiting the amount they offer in loans owing to funding shortages caused by the credit crunch.

"Mortgage lending activity remains relatively weak and will decline further in the coming months as a result of funding constraints and lower consumer demand," said Mr Pannell.

Source:

news.bbc.co.uk