Housing transactions have fallen to their lowest level since records began, the Council of Mortgage Lenders has said.
It also noted that the contraction in UK mortgage lending since 2007 has been the most severe on record. It does not expect lending levels for house purchase to be higher than 520,000 loans – the same as 2008 and 2009. The figure is lower than in any other year since 1974.
In the decade before 2008, loans for house purchase averaged almost 1.2 million a year, so the fall has been in excess of 50%. The fall in lending is even more dramatic when measured by value, rather than volume. In 2009, gross lending for house purchase totalled £70bn, 55% below the 2007 figure of £155bn.
Over the same period, net mortgage lending fell from £108bn to £12bn and a further decline is expected in 2010.
Not surprisingly, says the CML, housing transactions have fallen to their lowest level since current records began in 1978. The 770,000 transactions recorded in England and Wales in 2009 compares with 1,430,000 in 2007 and a low in the last housing market downturn of 1,134,000, recorded in 1995.
The CML said: “Current levels of mortgage lending for house purchase are abnormally low, even for a recessionary period. “Although we must allow for some decline in demand, the pattern we have seen in this downturn underlines the extent to which the current slump is different. “It has been driven principally by a reduction in the availability of credit, while previous downturns in the early 1980s and early 1990s were essentially caused by a reduction in demand for credit in the face of economic uncertainty and high interest rates.”
Meanwhile, lending levels dipped slightly in October, Bank of England figures have confirmed.
The number of loans for house purchase stood at 47,185, slightly down on the September figure of 47,369 and lower than the monthly average for the previous six months of 48,503.
