UK property market gloom as lending figures slump

The gloom surrounding the property market in the UK deepened yesterday as lending figures showed double digit declines for house purchase and remortgaging in October.

Lending for house purchases fell 12 per cent year-on-year to £6.7 billion in the month, while loans for remortgages slumped 24 per cent to £3.1 billion, according to the Council of Mortgage Lenders.

The CML also revised down figures for overall lending in October, to £11.6 billion, which is 15 per cent lower than a year ago and 6.5 per cent below the level seen in September.

It had previously estimated that lending fell nine per cent year-on-year and was unchanged from September.

Month-on-month, the CML said lending in October for home purchases dropped six per cent to £6.7 billion.

The drop in lending comes after declining house prices and because of a rush to take advantage of a stamp duty holiday a year ago, according to the CML.

The lending figures are the lowest for October since the CML started taking monthly readings in 2002.

Loans to first time buyers, who are a key driver of growth in the housing market, declined 17 per cent year-on-year and nine per cent month-on-month to £2 billion.

There was some evidence mortgage providers are starting to lend money more freely again as the average first time buyer borrowed 80% of the value of a home, compared to 76 per cent in September.

But drops in house prices meant loans were less as a proportion to pay.

Lending for home movers fell to £4.7 billion, a 10 per cent drop year-on-year, said the CML.

Michael Coogan, director general of the CML, said: “Consumer confidence has also been affected by October’s spending review, despite the relative affordability of monthly mortgage payments, and so a stable but small lending market will continue for some time to come.”

Halifax said yesterday that house prices dropped 0.1 per cent during November and by 0.7% in the three months to November against a year earlier.