Mortgage lending fell to a two-and-a-half year low last month in the United Kingdom, with just £22.6 billion ($43.9 billion) advanced during the month as difficult market conditions dampened a record year.
That total represented the lowest monthly figure since May 2005, and a whopping 25 percent decline from November, according to the Council of Mortgage Lenders, who represent 98 percent of all residential mortgage lending in Britain.
“The credit crunch moved into its fourth month in December and continued to constrain the cost and availability of funds to lenders and, in turn, the cost and number of mortgage products available to borrowers,” said Michael Coogan, director general of the CML, in a statement.
“Looking forward, the recent decline in interbank lending rates and the prospect of further reductions in base rates in 2008 should provide some help to the market, although lending volumes are likely to remain weak for the next few months.”
Despite the recent downturn, the CML said mortgage lending rose to an estimated £362bn ($704 billion) last year, up five percent from £342bn ($665 billion) in 2006, surpassing the group’s October forecast of £360bn ($700 billion).
But as mortgage lending grew, so did missed payments, according to MoneyExpert.com, an independent financial comparison service.
Roughly 463,000 consumers in the UK have missed a monthly mortgage payment since July of last year, with those aged between 25 and 34 the most likely to have missed payments.
That amounts to about one in 25 borrowers, or 4 percent of the 11.8 million outstanding mortgage loans in the United Kingdom.
The group also found that 11 mortgage lenders have reduced their maximum loan-to-value (LTV) on a range of loan programs since last month, making it more difficult for first-time homebuyers to get a mortgage.