Money News

2008 was worst year for mortgages: official

Friday, 13 February 2009

Writes Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk

Bad luck if you want a mortgage - final 2008 figures show that it was the worst year for mortgage lending in decades

There were just 516,000 mortgages taken out in 2008 for house purchases, a decline of 49% from 2007 and the lowest level of deals since 1974, according to figures from the Council of Mortgage Lenders (CML) (www.cml.org.uk).

The figures also show:

• In December there were 32,000 home purchase loans, a decline of 5% from November and the lowest level since monthly records began in 2002.
• The number of people remortgaging declined by 26% from November to December. The CML suggest this was due to the combination of attractive SVR rates and restrictive lending criteria. So for many it was best to stay with their existing deal.
• Successful first-time buyers typically had a deposit of 22% in December, the highest proportion in 34 years of available data.
• Tracker mortgages increased in popularity in 2008 as the base rate fell, accounting for 29% of new loans, compared with 16% in 2007. However, the majority of borrowers continued to value certainty over monthly payments, with 58% choosing fixed-rate deals.

Michael Coogan, director general of the CML, said: “The shortage of mortgage funding and reduction in the number of active lenders has reshaped the mortgage landscape in the space of a year. This low level of transactions is insufficient for the functioning of an efficient market.

“Measures are now in place to seek to restore the flow of funding to the mortgage market, but this will take time to feed through. Further action may still be necessary to increase transactions, stabilise prices and restore confidence.”

Chris Eagle, commercial manager at CreditChoices.co.uk, said “Levels of lending are low, but there are still some great mortgage deals out there if you fit lender’s individual criteria. Use our mortgage comparison tool to compare mortgages and find out what rate you could be eligible for.”

Compare mortgages >>>

Top ten tips for switching mortgages >>>