July lending down 6% on 2010 figure

Mortgage lending in July fell by 1%, leaving lending now 6% lower than the same month a year ago, according to the Council of Mortgage Lenders.

The CML said £12.6bn of loans were made in July, down from £12.7bn in June. The fall comes against a backdrop of weak economic data for the economy as a whole, but positive financial results from a number of the major housebuilders.

The further fall from the 2010 figures comes despite the fact the amount of money lent on mortgages in 2010 was less than half the amount lent at the height of the boom in 2007.

CML chief economist Bob Pannell said the data showed prices were set to drift lower in the coming months. “UK economic prospects have deteriorated as a result of weaknesses in some of the major economies and renewed stresses in the eurozone area associated with the sustainability of government finances,” he said. “Housing market conditions remain subdued, but pretty stable. Seasonal factors continue to provide some support, but underlying house purchase activity may drift lower over the coming months.”

Peter Rollings, chief executive of estate agent Marsh & Parsons said: “Lending remains a world away from the level we need to see for the national housing market to pick up steam again. Despite the recent improvement in mortgage rates, demand for mortgage finance is still being thwarted by overly strict criteria.

“Until lenders address the dearth of lending to lower income buyers, we won’t see a renewed recovery in the national housing market.”