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• Figure down 15% on January
• CML blames inflows to National Savings
Gross mortgage lending fell by 15% to an eight-year low in February as lenders struggled to raise funds to provide new mortgages, the Council of Mortgage Lenders said today.
The outflows of money from banks and building societies and into the safer government-backed National Savings & Investments was a factor in the fall in lending over the month, which saw the total amount advanced to borrowers fall to £9.9bn, compared with £11.7bn in January.
February is typically the weakest month for mortgage completions as many people put their home-buying plans on hold over the Christmas period, but this February's lending figures were the lowest since 2001 and 60% down on the same month last year.
The CML said although the decline was much larger than the 3%-4% drop usually experienced between January and February, it was in line with its forecast of £145bn gross mortgage lending in 2009.
The group's director general, Michael Coogan, said the government's own bank was causing problems for lenders.
"Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings & Investments, which has a negative impact on their ability to lend," he said.
"This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more.
"At the same time, the government's own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained."
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