Quality Speaks For Itself

Mortgage lending dives in 2008……………

Posted in Financing by Ash on February 13th, 2009 05:20pm

It was announced today that the number of mortgages taken out by house hunters fell to its lowest level since 1974 during 2008. The Council of Mortgage Lenders numbers show that just 516,000 mortgages were taken out for house purchase last year which is a fall of 49% compared to 2007.

Net lending, which strips out redemptions and repayments, for all types of mortgage also dived sharply, dropping to £39.7bn in 2008, from £108.2bn a year earlier. There was also steep fall in the number of first-time buyers getting on to the ladder. Just 194,200 people bought their first home in 2008, 46% fewer than in 2007. That slump in first time purchases continued in December, with just 12,100 people taking out loans collectively worth £1.4bn – the lowest levels since the CML’s monthly records began in 2002.

So those are the hard numbers but what does it mean, as I guess the headline is not that much of a surprise to many! The reality is that the shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year. I don’t expect many of the currently hibernating lenders returning to the market any time soon if at all!

So we are in a position where the few lenders that remain can pick and choose what business they want to write and close their books as soon as they achieve relatively modest targets. I suspect that overall 2009 will start painfully slowly and then things will pick up at the tail end of the year, leading to a further overall contraction in the market.