UK Mortgage Lending Down 52Pct On Year Ago
The number of mortgages approved for house purchases was down to 21,584 in October, 52% lower than a year earlier.
The figures from the British Bankers' Association (BBA) show that in October, net mortgage lending by the UK's biggest banks rose by £2.9bn.
This was less than in September and below the average for the previous six months of £3.9bn.
The figures come the day after a stark warning about the state of the mortgage market in a report by former banker Sir James Crosby.
He warned that without government intervention, net new mortgage lending might shrink below zero in 2009.
Sir James said that, in the current economic climate, it would be hard for banks to finance loans.
"Therefore I believe that new net mortgage lending is likely to fall below zero in 2009, with only a modest recovery likely in 2010," he said.
The downturn in the global financial market paired with tightening credit conditions continues to take a toll on Europe’s second largest economy, and conditions may only get worse as home prices fall further.
Meanwhile, business investments in the U.K. fell 0.2% in the third quarter despite expectations for a 1.9% decline. The data suggests that economic activity will remain subdued well into 2009 as the economy heads into a recession, which could force the Bank of England to lower borrowing costs even further as growth prospects deteriorate.
Market participants have already raised bets that the BoE will deliver a 50bp cut at the December 4th policy meeting, which would lower the benchmark interest rate to 2.50% from 3.00%.
The figures from the British Bankers' Association (BBA) show that in October, net mortgage lending by the UK's biggest banks rose by £2.9bn.
This was less than in September and below the average for the previous six months of £3.9bn.
The figures come the day after a stark warning about the state of the mortgage market in a report by former banker Sir James Crosby.
He warned that without government intervention, net new mortgage lending might shrink below zero in 2009.
Sir James said that, in the current economic climate, it would be hard for banks to finance loans.
"Therefore I believe that new net mortgage lending is likely to fall below zero in 2009, with only a modest recovery likely in 2010," he said.
The downturn in the global financial market paired with tightening credit conditions continues to take a toll on Europe’s second largest economy, and conditions may only get worse as home prices fall further.
Meanwhile, business investments in the U.K. fell 0.2% in the third quarter despite expectations for a 1.9% decline. The data suggests that economic activity will remain subdued well into 2009 as the economy heads into a recession, which could force the Bank of England to lower borrowing costs even further as growth prospects deteriorate.
Market participants have already raised bets that the BoE will deliver a 50bp cut at the December 4th policy meeting, which would lower the benchmark interest rate to 2.50% from 3.00%.
