Mortgage lending problems continue stated CML

The Council of Mortgage Lenders has confirmed that the problems in the mortgage market are continuing, despite the recent £50 billion mortgage rescue plan that was launched by the government in order to try and increase liquidity and confidence in the mortgage sector. Mortgage lending levels have continued to fall, with May figures showing a significant drop from the same period last year.

An official from the Council of Mortgage Lenders stated: “The next few months will remain very weak for house purchase activity for the funding reasons which are now well rehearsed. We still await first signs of the Bank of England’s special liquidity scheme indirectly helping to ease the current logjam.”

Since the onset of the global credit crunch last summer the mortgage industry has been thrown into turmoil. The number of mortgage products has been slashed, tighter credit conditions have come into force, and lenders are finding it more difficult and expensive to secured finances to fund their mortgage lending.

There has been a slump in housing sales, and house prices have been falling in value, further fuelling the slump in housing sales. One economist said: “Very low housing market activity seems certain to feed through to further depress already markedly weakening house prices.”