Mortgage lending weakened in second half of 2007

Mortgage lending remained weak in December, mirroring the situation over the previous few months, according to new figures published today (January 24th).

Statistics from the British Bankers' Association indicated a slowdown in both lending levels and approvals, with last month seeing gross lending of £15.1 billion, compared to £16.5 billion in November 2007.

However, while the mortgage approval figures revealed a decline in loans approved for house purchase, as well as equity release mortgages, they also show an 11 per cent year-on-year increase in the number remortgaging deals that were given the go-ahead.

"Mortgage lending weakened notably in the second half of 2007 as the credit crunch impacted on banks’ ability to lend," said BBA statistics director David Dooks.

"At the same time, demand for mortgages also softened in the face of increased borrowing costs and lower disposable income," he added. "The combination of these factorsis resulting in the marked market slowdown and weakness in house prices we are now seeing."

Today's figures come after data published by Connells Survey and Valuation also revealed a drop in mortgage approvals last month, fuelling calls for a reduction in interest rates.

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