Monthly Mortgage Statistics
It seems like a long time since this blog carried some decent stats, so here goes.
The Council of Mortgage Lenders (CML) monthly report shows that the slump in mortgage lending continued in February, with gross lending down by 60% on February last year.
Lending, at £9.9bn, was 15% lower than in January, and was the lowest figure for any month since February 2001.
The CML said its members’ ability to lend was drying up because too many savers were choosing to put their money in National Savings policies.
In the most sobering statistic, mortgage rationing has led to house sales falling by more than half.
The CML’s director general said, “Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings & Investments, which has a negative impact on their ability to lend.
“Until funding improves, the capacity of lenders to lend will remain constrained,” he warned.
National Savings & Investments (NS&I) has already raised an extra £10bn in just the first nine months of the current financial year, far ahead of its original forecast of an extra £4bn for the whole of the year.
Of that, £6bn came in during the last three months of 2008 as the collapse of the Bradford & Bingley and Icelandic banks pushed savers into looking for a completely safe home for their money.
However, the cost for those savers has been lower interest rates on their accounts. NS&I has brought down its savings rates in line with the fall in the Bank of England’s bank rate.
This week NS&I announced that the payout rate on Premium Bonds would be cut from 1.8% to 1%, with one of the two £1m jackpot prizes being cancelled.
With the economy in its current state and government borrowing still skyrocketing there seems little chance that savings will return soon. Consequently mortgages will remain hard to come by the housing market stagnant for some time yet.
