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Number of new mortgage loans dropped in February

A recent report from the Council of Mortgage Lenders shows that the number of new mortgage loans given out by lenders in February dropped by around one third, with just 49,000 mortgages being advanced to those wishing to purchase a property. The CML states that over the last year the level of new mortgages being approved has fallen to record lows. Officials from the CML have said that with lenders tightening up on their lending criteria and taking many mortgage products off the market the situation is likely to continue getting worse.

Compared to the number of mortgage loans advanced by lenders last February, this February's figures reflected a fall of 30%, although the level of remortgages as opposed to new mortgages has been taking a larger chunk of the mortgage lending market. Officials expect remortgaging to prop up the mortgage sector for the foreseeable future, particularly given that many people are set to come off cheap fixed rate deals and will be looking for an alternative mortgage product.

One mortgage broker stated: 'People are contacting us six months before their rate is due to expire as they are worried that they may not be able to get a good deal later in the year.' He also commented on the difficulties in the mortgage market, stating: 'Things will get worse. Despite the fact that rates will go down this Thursday, they need to drop between 0.5% and 1% in order to ease the current situation. Any less would just cancel out the recent rate increases by mortgage lenders.'

An official from the Council of Mortgage Lenders stated: 'The February figures relate to completions of transactions started several months ago. More recently, there has been consistent evidence of tightening in lending criteria which we expect to continue as lenders respond to the challenging market conditions.'

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