Decrease in new mortgage lending
22 April 2003
Figures released today show that the amount of mortgage lending has decreased for the first time since June 2002.
A survey by the Council of Mortgage Lenders (CML) found that gross mortgage lending during March remained strong due to the high levels of remortgaging. Gross mortgage lending totalled £19.3 billion in March, up from £17.6 billion in February and £16.1 billion in March last year.
Remortgaging accounted for 50 per cent of all lending, totalling £9.6 billion, up from £8.7 billion in February and £6.0 billion in March last year. However, loans for house purchase accounted for only 40 per cent of all lending at £7.8 billion. Despite being higher than last month's £7.3 billion, lending for house purchase this was 13 per cent lower than in March last year.
The slowdown in new mortgage lending reflects similar surveys that have found that uncertainty about the future of the economy and the war in Iraq have dulled the housing market boom.
The reduction in the number of new mortgages reflects finding from the Royal Institute of Chartered Surveyors (RICS) last week, which found a fall in the number of first time buyers and an increase in the number of properties on estate agents books.
CML Director General Michael Coogan commented, 'The mortgage market is still performing very strongly, although remortgaging is the main driver of the current buoyancy. It is still too early to say whether the housing market has yet passed the turning point towards a slow down in house prices and transactions.'
He continued, 'The lower year-on-year level of lending for house purchase suggests the market may be returning to more normal levels, although it is important not to read too much into a single month's figures.'