This is 10% lower than August's gross lending figure of £12.9 billion and a 15% fall from £13.7 billion in September 2011.
Gross lending for the third quarter of 2012 was therefore an estimated £37.3 billion, an 8% increase from the second quarter of this year (£34.5 billion) but a 5% decrease from the third quarter of 2011 (£39.3 billion).
In today's market commentary, CML chief economist Bob Pannell observes:
"There have been hints of demand softening over recent months, but monthly patterns may have been distorted by the Olympics. House purchase demand failed to lift significantly in the third quarter, despite much better mortgage availability. Remortgage activity continued to languish, in contrast to relatively strong levels a year ago."
Ashley Brown, director of independent mortgage broker, Moneysprite, commented:
"The debate clearly now focuses on demand rather than supply. Finally, a Government scheme to encourage lending is encouraging lending. After a slow start, the Funding for Lending scheme has given the wider mortgage market an important shot in the arm.
"There is a lag to this data and I expect to see stronger numbers in the months ahead. In October, there has definitely been a greater appetite among people to borrow. With unemployment continuing to fall, there are reasons to be positive. It's no longer purely the 60% loan-to-value borrowers who are benefiting.
"Rates are now coming down at 70%, 80% and 85% LTV. The 60% LTV market is saturated and lenders are having to look to higher loan-to-values to achieve a better margin.
"With rates at 90% LTV below 5% and at 95% LTV below 6%, price is no longer an obstacle. Demand and the ability to find deposits are now key. Interest-only mortgages are now as good as dead, and this is definitely restricting customer choice."
Hugh Wade-Jones, director of the independent mortgage broker Enness Private Clients, commented:
"It's a depressing double act - the housing market is still soporific and mortgage lending is going back into hibernation. Total lending in September fell to the lowest level since April's atrociously low numbers. Such underwhelming performance cannot be explained away by one-off mitigating factors like post-Olympic gloom.
"The fact is that demand is still weak, and the industry's appetite to lend is patchy. Despite the Funding for Lending scheme increasing the availability of money, the high cost of underwriting loans is still forcing lenders to charge prohibitively high rates of interest to borrowers with small deposits. The one bright spot is that lending to first-time buyers, long seen as the key to driving the market forward, is rebounding well.
"Would-be borrowers are being asked to jump through fewer hoops as lenders start to ease some of their more draconian loan criteria. This week Santander announced a relaxation of its criteria, and a plan to double its mortgage lending next year. While that is an encouraging sign for 2013, lenders are clearly sleepwalking into the end of this year."
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“The CML’s gross lending figures for September portray a mixed picture, with month-on-month lending down from August, but the Q3 figures were up on Q2.
“However, the September lending figures refer to completions which were hit by the usual summer lull and the effect of the London Olympics. In contrast, MAB found mortgage applications actually increased last month, up 1.9% on August. Application activity has been boosted by increased availability of competitive mortgage deals and the launch of the Funding for Lending Scheme, which has seen a number of lenders have now begun to engage with the higher loan-to-value sector again.
“Nevertheless, we still need to see more lenders moving up the LTV curve before there will be any sizeable increase in housing transactions.”
Duncan Kreeger, chairman of West One Loans commented:
“The mortgage market is clearly in a lot of trouble and today’s figures show the situation is getting worse. Traditional credit is failing and even the government’s flagship Funding for Lending scheme is having little effect.
“Lending is as weak as it’s been for 18 months. Inflexible rules around capital adequacy and income ratios are paralysing the market, and tight credit scoring is freezing borrowers out of the market. This week’s report from Ernst & Young announced that UK housing and mortgages would power a full-scale economic recovery next year. That looks like wishful thinking set against this news. The mainstream mortgage market won’t escape from this hole it’s in any time soon.
“This is exactly why we’re seeing plenty of buy-to-let investors and developers turn to alternative forms of finance in the absence of credit from the high-street. With traditional mortgage lending struggling so badly, alternative forms of finance like bridging are becoming increasingly important to the lending mix.”
