CML: Mortgage lending down again

08-01-2008

CML: Mortgage lending down again
Gross mortgage lending fell again in November according to new figures from the Council of Mortgage Lenders (CML).

Data from the body that represents the mortgage lending industry reveals gross lending was at £30 billion in November, down 10.4 per cent from October, and 9.6 per cent from the £33.2 billion recorded in November 2006.

In total there were 80,000 mortgage deals for home purchases completed, a fall of 3.1 per cent on October.

Remortgage deals fell by 21 per cent to 73,000 – as homeowners seem to be sitting on their hands as fixed-rate deals end and they are faced with higher repayments.

The possibility of further interest rate cuts – following December's reduction of 0.25 per cent from the Bank of England - is also seen as a further reason people are holding back from remortgaging.

Looking towards the interest rate decision from the monetary policy committee (MPC) tomorrow, CML director general Michael Coogan said the decision would be close.

"There are mixed signals on inflationary pressures here which will make the MPC’s decision finely balanced, but consumer confidence would be further underpinned by another rate cut this week," he said.

However, he warned not all mortgage lenders may cut interest rates if the Bank decides to do so.

"Each lender will make its own commercial decision on whether to change its standard variable rate (SVR) to follow a base rate move, depending on its risk profile, cost of funds, and business focus," Mr Coogan said.

Today, prime minister Gordon Brown said mortgage lenders had a duty to cut rates if the Bank reduced the base rate.

He said: "I think where interest rate cuts happen, buildings societies and banks have a duty to take that into account."

Chancellor Alistair Darling added it was "part of the deal" that mortgage rates fell when the Bank reduced interest rates, just as they rose when the base rate was increased.

He said: "I would hope if interest rates continue to come down, then the benefit of that reduction would be passed on to mortgage payers because that would benefit them and their families."

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