Residential mortgage lending in the UK sees a steep decline

Gross mortgage lending in the UK is 51% lower than in was a year ago and is likely to turn negative in 2009, according to the latest data.

Figures from the Council of Mortgage Lenders, whose members make up around 98% of all residential mortgage lending in the UK, show that in November residential lending was an estimated £14.6 billion, a 22% fall from October and a 51% fall from November last year.

While there is typically a decline from October to November, this year it is considerably larger than usual reflecting the market disruption and continued deterioration of confidence in the economy.

Looking ahead to 2009 there is not much hope of improvement. Forecasting in the current economic climate is challenging, the organisation points out and predictions need to be seen as indicative, rather than as a precise assessment of likely activity.

'In looking ahead to the coming year, the housing market will remain extremely subdued and net mortgage lending is likely to turn negative. Repayment problems will worsen against the backdrop of rising unemployment but lenders and government are working to try to reduce the negative impact on borrowers,' said CML director general Michael Coogan.

'Recent glimmers of light in terms of government intervention to improve conditions to support new lending are helpful, but more will be needed. Next Year will be a challenging time, but borrowers who remain in employment will see some benefits in the form of lower mortgage rates,' he added.