Mortgage lending slumps 44% year-on-year
Posted by hasnain on 9 July, 2008
Figures released from the Council of Mortgage Lenders (CML) have revealed that mortgage lending in May was down 44% year-on-year.
Furthermore, homeowners opted not to re-mortgage due to soaring arrangement fees. Statistics showed that there were only 71,000 loans for re-mortgage in May this year, down 14% from the previous month.
In 2003, the average arrangement fee was around £299, however since the UK mortgage market has deteriorated, a typical arrangement fee can now be over £2,000.
While mortgage agreements increased by an insignificant 4% between April and May on an annual basis, the number nearly halved as home loan rates continued to increase, according to the CML.
First-time buyers have been hit badly by the mortgage freeze as a result of the credit crunch. The CML figures revealed that first-time buyer mortgages were down 41% from May 2007 to May 2008.
It seems that borrowers are looking for security in the current economic climate as the most popular mortgage is the fixed-rate, making up for 66% of all mortgages in May.
Michael Coogan of the CML explained that lending levels continue to be lower than last year and any recovery is not expected in the short-term. There is little indication that the special liquidity scheme is increasing the flow of funds to the industry or lowering the cost of funds as was desired.
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