Mortgage lending by building societies has tumbled 90% over the past year, according to figures released by the Building Societies Association (BSA).
The amount of money lent by building societies has been steadily declining since the beginning of the year, but has fallen rapidly over the past month.
The figures show net lending by building societies fell from £1,262m in May 2007 to just £125m in May 2008.
Furthermore, lending fell 81% during May from £666m, indicating a rapid tightening of lending criteria among building societies.
Earlier figures from the Bank of England suggest total mortgage lending fell by 64% over the last twelve months, while the British Bankers Association noted a 56% fall.
Adrian Coles, director general of the BSA, comments: “The lending figures reflect the depressed state of the housing market. With 74% of respondents to the BSA’s Property Price Tracker survey expecting property prices to fall over the next year, it is no surprise that demand for new mortgages remains low, with net lending amounting to only £125m.”
“It is important not to read too much into one month’s very low figures. However, the figures do reflect the considerable adjustment in housing market activity now being experienced. We expect activity to remain at low levels for some time.”
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