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UK Feb mortgage lending falls 6%
21 March 2008
A biting credit crunch is to blame for a fall in new mortgage business in the UK in February, even while demand remained high according to the Council of Mortgage Lenders (CML).
Mortgage writing fell by six per cent in February against January figures with only £24 billion in new business being written.
The problem remains with liquidity levels, with the Bank of England (BoE) holding various crisis talks over the past few weeks in order to inject more funding into a system in which short-term loans on the international money market.
Last week the BoE advanced an extra £5 billion to banks to cover short falls, but it was reported that the banks put out their hands for £23 billion.
Michael Coogan, the director-general of the CML, said that the problems are likely to remain until a solution is found to drying pools of liquidity.
"Demand for mortgages remains strong but cannot be fully met from existing funding. This has led many lenders to reduce their product ranges, increase their mortgage prices and, in some cases, to reduce their lending capacity," he said.
Mr Coogan added that all parties were monitoring the situation on a daily basis.
"As credit conditions change markedly from day to day, lenders will continue to rapidly adapt their products and pricing to match. This is a vital response to the uncertain conditions," he concluded.
The new figures come as banks tighten lending criteria with some banks demanding up to 25 per cent deposit on property before giving borrowers access to much needed funds. 
