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Mortgage lending fell by 6 per cent in August

Gross mortage lending by banks, building societies and specialist lenders fell by 6 per cent in August compared with July, according to the Council of Mortgage Lenders.

Lending has fallen from £34.1bn in July to an estimated £32.2bn in August.

The CML says these figures relate to a period when the current wholesale funding pressures in the market were less pronounced.

During September, a number of lenders have withdrawn lending products, amended their lending criteria, or re-priced their deals due to the credit crunch.

But the CML says some lenders have reduced the rates on their fixed mortgage products.

The CML says the reduction in available funding could translate through to a reduced supply of lending, although the Bank of England’s most recent interventions to support liquidity in the interbank lending market may help to restore the availability of funding more quickly than would have otherwise been the case.

CML director general Michael Coogan says: “The events of the past week have shown us how very quickly situations can change. Even after the good news on inflation falling back, the Fed’s rate cut, and the Bank of England’s support for 3 month funding, it is not a given that the Bank will follow suit on cutting rates. It makes sense for consumers to continue to plan for rates at or about their current levels for the forseeable future. We are not out of the woods yet.”

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