More money is set to be taken out of the housing market than is being put back in for the first time in more than 20 years, economists warned yesterday.
Net mortgage lending – the value of new loans extended minus repayments of principal – could turn negative by the end of the year, economists said following data on mortgage outlays from the Council of Mortgage Lenders. That has not happened since the CML began collecting data in 1987.
If mortgage lending turned negative, it would imply that demand for house purchases was falling and that home prices were likely to go on falling.
The CML yesterday reported gross mortgage lending of £17.7bn for September, a decline of 10 per cent from August and 42 per cent below the level of a year before. This was the lowest gross monthly mortgage lending number since January 2001.
The CML said mortgage lending typically showed a drop from August to September, but the data showed the lowest level of lending for any September since 2001.
Financial Times, The Times, The Guardian