Home Loan Approvals Fall To Record Low

Fri, 16 Jan 2009

The number of mortgages approved for new home purchase continued to fall in November, according to the latest figures from the Council of Mortgage Lenders (CML).

Lenders approved 33,000 new home loans in November, down 17 per cent on the previous month and 59 per cent lower than in November 2007.

First-time buyers had to put down an average deposit worth 18 per cent of their property's value, the largest for at least 35 years.

The CML said that without further government intervention, lending activity would continue to weaken in coming months.

"Limited mortgage funding and reduced consumer demand will weaken lending activity further in coming months," warned Michael Coogan, the organisation’s director general.

"The flow of funds to the mortgage market will not improve this year without further intervention by government."

In November, first-time buyers were forced to put down their largest deposits for at least 35 years, with an average 18 per cent of a property’s value demanded by lenders.

According to the CML, lenders are using large deposits as a method of rationing their limited mortgage funds, and to protect themselves against losing money if borrowers default while house prices continue falling.

The council added that many first-time buyers would continue to struggle to raise the money for such large deposits.
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