According to the CML, gross mortgage lending declined to an estimated £9.9bn in February, down 15 per cent from £11.7bn in January and 60 per cent from February 2008.
The CML says this is the lowest monthly lending figure since February 2001, and blames the retail savers’ recent flight to safety in the form of the Government’s National Savings & Investments.
CML director general Michael Coogan says: “Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings and Investments, which has a negative impact on their ability to lend.
“This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more. At the same time, the government’s own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained.”
The CML says February is typically the weakest month for mortgage completions, and although this is a larger decline than the 3-4 per cent usually experienced between January and February, it says it is still in-line with its forecast of £145bn gross mortgage lending in 2009.