Fall of 7% in mortgage lending for February

According to industry officials there was a fall of 7% in mortgage lending for the month of February, with around £24 billion being borrowed over the course of the month compared to £25.9 billion being borrowed in January. The figure was down 6% compared to the same period last year, and reflects the continuing problems that have been affecting the mortgage market since the onset of the global credit crunch, which swept across the UK late last summer.

The data comes from the Council of Mortgage Lenders, and officials from the CML have stated that the Bank of England needs to intervene and offer more help to the mortgage markets in order to stop the situation from continuing. The CML described the current situation as a slow phase in the housing market, but one that could easily continue unless the necessary action is taken by the central bank.

The Bank of England has increased funding for the mortgage sector recently, and this was described by the CML as a ’step in the right direction’. However, the CML was also quick to point out that increased intervention was needed, stating: “a programme of more aggressive, broader-based intervention would be entirely appropriate for the Bank in the current environment of uncertainty.”

The CML also went on to state: “Demand for mortgages remains strong but cannot be fully met from existing funding. This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity.”

Lenders are experiencing difficulties in securing finance on the wholesale money markets to fund their mortgage lending, and the range and affordability of mortgages has really suffered as a result of this.

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