Mortgage lending at a 34-year low

According to the Council of Mortgage Lenders (CML), the number of mortgages for house buyers is at its lowest level since 1974, as only 516,000 mortgages granted to house buyers, which is a decrease of 49 percent from 2007.

Louise Cuming, head of mortgages at moneysupermarket.com, said that the relatively small number of mortgages that have been taken out is a further indication that the recent interest rate cuts have not been successful in sparking the housing market back into life.

The reduction of mortgage funds has been seen across all lenders, which has meant that first-time buyers now have to put down an average deposit of 22 percent, as well as having the greatest difficulty in being accepted due to the nature of being higher-risk from a smaller deposit.

Michael Coogan, director general of the CML, said the housing market is very inefficient due to the low levels of transactions and the fact that there is very little movement has a number of devastating affects on the economy especially those industries that revolve around property and consumption.

Even though the Bank of England has cut interest rates from 5 per cent to 1 per cent over the last 5 months, the economy has not been kick-started and the housing slump is still in full swing, and it is the lack of affordable mortgages that throughout the credit crunch has stifled the property market, concluded Mr Coogan.

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