Head of research Bob Pannell warns there is more bad news to come. He says: “There was a small month on month increase in activity but it represented a notable decline from a year ago. This continues the weaker picture seen in June and points tow-ards the more subdued levels of lending that we are likely to see in the second half of this year.”
Datamonitor says the mortgage market will shrink by 20 per cent this year followed by a further 3 per cent fall in 2009.
Senior analyst Karina Purang says: “The consumer lending market has moved bey- ond recognition. Lending markets are beset by high market uncertainties, with the ongoing credit crunch, falling house prices, rising arrears and repossessions and indebted consumers struggling to find credit.”
The Royal Institution of Chartered Surveyors believes tighter lending criteria are set to continue.
Senior economist Oliver Gilmartin says: “Banks are still in the process of repairing their balance sheets and as the securitisation markets remain effectively closed, mortgage lending is unlikely to recover in any meaningful way.
“Despite the prospect of further interest rate cuts as the economy slows sharply into 2009, tighter lending standards look set to stay.