Mortgage lending by building societies fall by 90%

Building Societies Association (BSA) has now released figures that mortgage lending by building societies have fallen by 90% over the past year. On a month by month basis the money that building societies lend has been falling steadily, but it is this past month that it has fallen rapidly. In May 2007 building societies net lending was at £1,262m, this has fallen to just £125m of May 2008.

However; lending has now fallen to £666m in May that is a drop of 81%, this shows that rapid tightening of lending criteria from lenders is not having an affect. The Bank of England also released figures that total mortgage lending has now fallen to 64% in the past year, British Bankers Association, report that the drop is at 56%.

Adrian Coles, director general of the BSA, has said The lending figures reflect the depressed state of the housing market. With 74% of respondents to the BSA’s Property Price Tracker survey expecting property prices to fall over the next year, it is no surprise that demand for new mortgages remains low, with net lending amounting to only £125m.” He also added “It is important not to read too much into one month’s very low figures. However, the figures do reflect the considerable adjustment in housing market activity now being experienced. We expect activity to remain at low levels for some time.”

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