Housing sales remained muted in September as gross mortgage lending tumbled to its lowest for a decade – a figure described as "a shocker" and "truly dire".
Adjusted figures from HMRC show 77,000 transactions took place last month, compared with 74,000 in August.
But figures which had not had the benefit of seasonal adjustment show house sales in September actually fell, from 82,000 in August down to 78,000.The adjusted figure for this September shows a slight fall from the 78,000 transactions last September.
All the figures show what a long way the market has to go: in 2006, there were 149,000 house sales (seasonally adjusted) in September – about double the figures now being seen.
Meanwhile, gross mortgage lending in September fell to its lowest level for a decade, said the Council of Mortgage Lenders.
Its figures were issued as all eyes were turned on the Chancellor’s Spending Review and have been largely buried as a result.
Gross lending totalled an estimated £12bn, down 1% from £12.1bn in August and down 7% from September 2009 (£12.9bn). This is the lowest September total since 2000 (£10bn).
Gross lending in the third quarter was an estimated £37.4bn, a 9% increase from the second quarter but down 4% from the third quarter of last year.
CML director general Michael Coogan warned: “Lending volumes do not seem likely to increase substantially towards the end of the year. Funding pressures on lenders remain, and the practical implications of government and public spending cuts are beginning to emerge, with a resulting impact on consumer confidence.”
Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said: “The September figures are a shocker – down on August,usually the quietest month of the year, down on last September when we were still in the grips of recession, and no sign of the traditional post-summer bounce in mortgage activity, which doesn’t bode well for the rest of the year and early 2011.
“We knew it was going to be a quiet autumn in light of the Spending Review, but this is worse than many had feared. Although there are some very competitive products available at lower LTVs, the market as a whole is still very weak and is unlikely to improve in the current economic climate. “
With buyers as cautious as lenders, this is going to be a long, hard winter, and further downward pressure on house prices looks inevitable.”
David Whittaker, managing director of specialist buy-to-let lender Mortgages For Business, said: “These figures are truly dire. The CML must now bite the bullet and admit that gross lending for the year is likely to be £125bn. There is no point in continuing to skirt the issue.
“It’s been encouraging to see some lenders re-entering the market, but so much more needs to be done if the industry is to return to any semblance of health. The Government has to take responsibility: it’s about to flood the rental market, having cut social housing, so it needs to encourage lenders and landlords to increase activity.
“With lending now as low as in 2000 and house prices around double the value, it doesn’t take a Nobel mathematician to work out that we can’t continue like this.”
