Gross mortgage lending fell below £10bn in February to its lowest monthly figure for more that eight years, figures published by the Council of Mortgage Lenders (CML) show.
According to the trade body, lending slumped to £9.9bn last month, the lowest level since February 2001. The figure represents a 15% fall from the £11.7bn sum posted in January and a 60% drop from February 2008.
The CML was keen to emphasise, however, that February is typically the weakest month for mortgage completions, adding although this is a larger decline than the usual 3% or 4% decline between January and February, it remains in line with its forecasted £145bn gross mortgage lending in 2009.
"Retail savings are now the predominant source of funding for mortgages," CML director general Michael Coogan says. "But banks and building societies have seen savings ebb away to National Savings and Investments, which has a negative impact on their ability to lend.
"This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more.
"At the same time, the Government's own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained."IFAonline
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