CML: November lending hits ten-year low

Gross mortgage lending in November fell to its lowest figure since 2000 at an estimated £11.1bn, according to the CML.

This was 5% down on October's figure of £11.6bn and 10% down on November 2009, when mortgage advances reached a distorted £12.3bn due to the end of the Stamp Duty holiday.

In November 2000, gross mortgage lending was £10.9bn and this November's fall marked the fifth consecutive month where gross mortgage lending was at its weakest levels since the equivalent month of 2000.

Bob Pannell, chief economist at the CML, says: "The fall in gross mortgage lending in November reflects the usual seasonal slowing of activity at this time of year and reinforces the picture of a continuing flat market.

"Comparisons with the year earlier are somewhat distorted, as some households brought forward house purchase activity into the closing months of 2009 to take advantage of the Stamp Duty concession. However, both demand for mortgage borrowing and the supply of funds for lending remain heavily constrained."

He adds: "The CML market forecasts published last week suggest that gross mortgage lending in 2011 is likely to remain at similar levels to this year. We estimate gross mortgage lending for next year will total around £135bn."

Brian Murphy, of Mortgage Advice Bureau, says: "The November gross mortgage lending figure is understandably distorted against the same month last year but there is no distortion to explain away the weakest November for ten years. That's just a reflection of the weakened state the market is in.

"Demand is very weak at present for obvious reasons. People are worried about the economy, their jobs, their spending power, which is being eroded by rising inflation, and interest rate rises, which may come sooner than we would like if inflation rises further. This is a brutal winter for the mortgage market.

"With the almost month-on-month reduction in fixed rate pricing during 2010, and the protection fixed rate products offer against interest rate rises, almost two-thirds of borrowers gravitated towards fixed rates last month."