Mortgage drought deepens on 32% lending fall

(Times Online) -- UK mortgage lending fell by 32 per cent in the year to June and is will worsen further if the Bank of England raises interest rates in a bid to combat inflation, mortgage lenders warned today.

Figures from Council of Mortgage Lenders (CML) show that during June - traditionally one of the busiest periods in the housing market - gross mortgage lending fell 3 per cent to an estimated £23.8 billion as buyers struggled to secure new home loan deals.

The CML said today the pace of decline in the mortgage market was accelerating, with lending in the first three months of this year down 11 per cent and by 21 per cent in the second quarter.

But there was a glimmer of hope for homeowners as Halifax, the UK's biggest mortgage lender, announced it was cutting some mortgage rates by up to 0.15 per cent. This comes after Nationwide Building Society cut some of its rates earlier this week, although it increased rates for borrowers who have less than a 10 per cent deposit.

However, Michael Coogan, director general at the CML, said that lenders' funding shortages was hampering the mortgage market and indicated that the Government needed to step up support.