Net mortgage lending in August rose by just £2.1bn; less than half the average rise over the previous six months (£4.7bn), according to the British Bankers Association.
Gross lending stood at £13.7bn, a drop of 5% in August compared to July and 27% lower than a year earlier.
House purchase approvals are very low at just £2.8bn, a fall of 69% from a year ago.
Remortgaging approvals in August were 28% lower than last year and the lowest since early 2001.
Approvals for equity withdrawal and other purposes were 35% lower than in August last year.
BBA statistics director, David Dooks, said: "The low number of mortgage approvals in previous months predicted lower gross lending in August and, together with remortgaging, a much weaker net lending figure than of late resulted.
“Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the Government's announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact in the months ahead
Consumer credit rose by £0.4bn in August, slightly above the previous six-month average of £0.3bn. Personal deposit growth continued to be weak and the annual growth rate declined by 0.7% to 4.0%.
The BBA’s lending figures have led to calls for the Bank of England to cut interest rates. Nicholas Leeming, major client director of propertyfinder.com, commented: “Mortgage availability is now likely to worsen further as interbank lending rates have shot up in response to recent banking turmoil.
“On the plus side, the chances of an imminent interest rate cut have improved; but in order for this to actually provide any relief to borrowers it is essential that the Government and the Bank of England take immediate further concerted action to ease market fears, improve liquidity in capital markets and enforce competitive behaviour between mortgage lenders.”
Date: 22nd, September, 2008
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