Mortgage lending falls again, lenders say

Woman walks past estate agent's window The UK property market has reached a plateau in recent months

New figures have underlined the subdued state of the UK property market.

Total mortgage lending fell again in August, for the second month in a row, the Council of Mortgage Lenders (CML) said.

The number of homes sold in the UK also fell last month, by 5,000 to 85,000, HM Revenue & Customs reported.

And the property website Rightmove said estate agents' asking prices in England and Wales dropped for the third month in a row in September.

"We face the prospect of a difficult second half of the year," said the CML's chief economist Bob Pannell.

"However, the Bank of England is likely to keep interest rates at record lows for longer to support the economy. This will continue to alleviate payment pressures for many borrowers," he added.

Last week, the Royal Institution of Chartered Surveyors (Rics) said the market continued to be affected by a combination of more sellers returning to the market but fewer would-be buyers, suggesting that prices were likely to fall in the coming months.

Low activity

Rightmove said new sellers had now reduced their asking prices by 3.4%, or more than £8,000, in the past three months.

It also reported that estate agents had record numbers of unsold homes on their books.

The CML said its members lent £11.4bn to home buyers and people remortgaging last month.

That was the lowest August figure since the year 2000 and reflected the subdued level of activity in the UK property market.

The HMRC figures continue to show that completed sales, while higher than last year, are still running at roughly only half the level seen before the banking crisis started in the autumn of 2007.

"Mortgage activity almost always falls August on July due to the summer holidays, but the decline this year is certainly larger than we would expect on seasonal factors alone," said Brian Murphy of mortgage broker the Mortgage Advice Bureau.

House price inflation graph

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