This is the lowest October total since 2000 (£9.9 billion).
The month-on-month annual comparison is likely to continue to decrease a little in the coming months, because underlying lending volumes rose sharply in the latter part of 2009 as borrowers rushed to take advantage of the stamp duty concession before the end of the year.
In a speech today at the Council of Mortgage Lenders’ 2010 Mortgage Industry Conference and Exhibition, CML Chairman Matthew Wyles says the industry is likely to end 2010 having done around £137 billion gross lending, and around £9 billion net lending.
The market remains subdued.
David Whittaker, managing director of Mortgages For Business, said:
“These figures offer no comfort to those of us worried about the availability of credit in the market. Lenders are beginning to resemble Sisyphus’ boulder, as the market continues to struggle against the weight of onerous lending criteria and limited liquidity.
"While 2010 lending looks likely to reach £135 billion, this is hardly an opening of the floodgates for the property market. We can take some comfort from the fact that lending hasn’t fallen month on month and the fact that lending in October 2009 was 9% higher than it is this year is less discouraging when one remembers the rush at the back end of 2009 to beat the stamp duty hike.
"Nevertheless, pressure will persist for private rental to make up the gap left by frustrated would-be buyers and it remains to be seen whether government is ready to give landlords the assistance they need if they are to bridge the gap left by the purchasing freeze.”
Brian Murphy, head of lending at Mortgage Advice Bureau, says:
"In a normally functioning market you would expect to see an uplift in overall activity between September and October following a plateau in the summer months. But this isn't a normally functioning market.
"Borrowers are nervous, even more so since the Spending Review and confirmation of some half a million public sector job losses. This fear for their personal circumstances has certainly contributed towards the drop-off in mortgage applications.
“Fear is informing the type of mortgage people are opting for. Both purchase and remortgage applicants are erring on the side of caution in spite of historically low interest rates, preferring the safety of fixed deals over variable products.
"What we have is a flat market lacking momentum and which has failed to build on the brief uplift between August and September. We are mildly encouraged that the October figures have stayed the same and that we haven’t seen a further drop-off."
Jonathan Moore, director of Easyroommate.co.uk comments:
“The mortgage market hasn’t just stalled – it’s in reverse. Gross lending has dropped to its lowest October total for a decade, and it is first-time buyers who are feeling the squeeze on mortgage finance most keenly. Lenders continue to require colossal sums for deposits and this is simply unachievable for the thousands of people waiting to get onto the property ladder.
"As a result, competition for rental accommodation is fiercer than ever, and rents continue to rise. In London alone, there are now eight prospective renters for every room advertised. And lending is not likely to suddenly pick-up in the foreseeable future.
"Banks and Building Societies are looking nervously towards their balance sheets as they consider future repayments for government bail-outs, and new lending has slipped far down the agenda. But it should not be forgotten. Achievable mortgage finance for first-timers remains the key ingredient to re-starting the property market’s recovery.”
