Mortgage lending study points to property market slowdown

Mortgage lending has dipped again for the second consecutive month, indicating that the housing market is cooling off.

According to the Council of Mortgage Lenders, there was a 4% drop in gross lending between August and September. Last month saw gross lending hit £25.4 billion, showing the first year-on-year drop since October 2000, at nearly 2% lower than the £25.9 billion advanced in September 2003.

As in August, September's fall in lending reflected a sharp reduction in loans for house purchase. House purchase loans totalled £11.2 billion, compared with £12.8 billion in August. Lending for house purchase was 23% lower in September than the record £14.6 billion recorded two months earlier in July. Just 44% of total lending was for house purchase in September, down from 48% the previous month and from last September's figure of 47%.

Loans for house purchase showed a marked fall, dipping below the 100,000 mark for the first time since the traditionally quiet month of February. First-time buyers continued to account for about 29% of all loans for house purchase.

But in such a quiet month this equates to fewer than 29,000 first-time buyer loans, compared with nearly 31,000 in August and nearly 32,000 last September.

CML Director General Michael Coogan said: "All the latest lending data reinforces evidence that the expected slowdown in the housing market is materialising. Remortgaging is holding up, but house purchase lending is slowing markedly. Data from other surveys corroborates the picture of an exceptional recent market that is now gently losing steam."


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