Warning over job losses after'train crash'lending figures

News Category: Industry News

Frustration and dismay has greeted the news that mortgage lending levels last month were the lowest in ten years, with the Business Secretary Vince Cable saying: “There is a potential train crash ahead.”

One expert predicted inevitable further job losses in the financial services industry and another said that the lending drought could be worse next year.



Mark Blackwell, managing director of software supplier xit2, said: “It’s difficult to see any upside in numbers for the foreseeable future.  

“Before we get anywhere near the market returning, there’ll be more pain for those in work, which will include putting many of those who are in it, out of it.”  



According to the Council of Mortgage Lenders, gross mortgage lending declined to an estimated £11.4bn, down 14% from £13.3bn in July and 6% down from £12.1bn in August 2009 when Britain was still in recession.

This is the lowest since August 2000 when lending stood at £11.1bn.

CML chief economist Bob Pannell warned: “We face the prospect of a difficult second half of the year.”



Paul Hunt, managing director of IT supplier Phoebus Software, said: “August’s seasonal lull in lending has been exacerbated by nervousness around the future of the economy and whether we are heading towards a double dip.
  
“But what is really incredible is that 82% of these mortgages came from just five lenders – a situation that needs to be rectified. The Government has to find a way of getting new lenders into the market. 

“Next year, some of these five lenders will be hampered by the new capital adequacy requirements for Basel III and the need to start paying back government funding. If there have not been significant improvements in the number of lenders in the market, we’ll be left with even more of a lending shortfall next year.”



Alan Cleary, managing director of Precise Mortgages, said: “This is bad news for the industry. We’re back to the glory days of the Blair government, the days when websites still felt exotic, and the Spice Girls were at the top of the charts. That’s bad enough. But worse still is the fact that back in 2000, the average price of a property was about half what it is today.

“It’s plain to see that housing transactions will remain subdued until the issue of mortgage funding is addressed.”

Brian Murphy, head of lending at independent mortgage broker Mortgage Advice Bureau, said: “Public sector cuts, tax hikes and incessant doom-mongering about a double-dip recession is hitting consumer confidence hard.

“The fact that lending was higher last August when we were still in recession will add to concerns, but the property market then was still in the early days of its revival and confidence was higher.

“A year ago we were in recession but the overall feeling was that we were leaving it. Now we are out of recession but the feeling in many corners is that we are heading back into it.

”

That feeling may have become more pronounced with news that bank lending levels to small businesses have contracted for the fifth successive month.


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