The amount of money lent for mortgages has declined by 8% since October, indicating a slowdown in the market, according to the Council of Mortgage Lenders (CML).
The CML also welcomed the support given by the Bank of England, which injected billions of pounds into global money markets to alleviate the credit crisis.
The CML’s latest figures show gross lending fell to £30.7bn in November, the lowest level since April 2007, and 8% lower than the £33.5bn lent in October.
November’s lending was also 8% lower than the £33.2bn of gross mortgage lending seen in November 2006, the first time lending has fallen below the same month in a previous year since July 2005. The CML says this clearly demonstrates that a market slowdown has begun.
Previously, the CML has said it was too early for the market to feel the full effect of the liquidity crisis and the demise of Northern Rock, though this would seem to be finally taking its toll on the market.
Michael Coogan, director general of the CML, says: "As we had forecast, lending in November dipped below its 2006 equivalent for the first time this year and we expect this trend to continue into 2008. However, while lending will be subdued in coming months we see this as primarily a result of lack of available funding rather than lack of consumer demand.”
He also welcomed an initiative by the Bank of England and several other central banks to inject liquidity into wholesale funding markets but stressed that support from the Bank needed to continue and be increased over the coming months.
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