Gross mortgage lending declined to an estimated £23.8 billion in June, down 3% from May and 32% from June 2007, according to the Council of Mortgage Lenders.
The decline between the first and second quarter was a marginal 1%. However, an increase would typically be expected in spring. The year-on-year decline has gathered pace in recent months; lending in the first quarter of 2008 was down 11% on 12 months earlier, while the second quarter was down 21%.
Michael Coogan (CML director general) commented:
"Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand.
"While by historic comparisons we still have had a good level of gross lending, new net lending has been constrained in 2008 and this picture will continue for the rest of this year.
"Government efforts to help housing associations purchase new-build properties and borrowers to save for a deposit are welcome, but are likely to have only a marginal impact on the housing market. The recent reduction in short-term fixed-rate mortgage costs is a small bit of welcome news for hard-pressed households facing significant pressures on their finances from the higher cost of food and fuel, in particular.
"However, borrowers on tight budgets will have to plan ahead to manage higher mortgage payments than they have been used to. Speak to your lender early remains the advice for anyone struggling to pay."
The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.8 million mortgages in the UK, with loans worth over £1.2 trillion.
