Gross mortgage lending drops in June

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According to the CML the fall in mortgage lending between the first and second quarter was one per cent, however the CML added that an increase would usually be expected in the spring.

The CML said that the year on year decline of mortgage lending had increased in recent months, with first quarter lending down 11 per cent on the previous year and lending in the second quarter down 21 per cent.

Michael Coogan, director general of the CML, said, "Market activity during a traditionally a busy time of year for mortgages has been muted by funding shortages and, more recently, dampened consumer demand.

"While by historic comparisons we still have had a good level of gross lending, new net lending has been constrained in 2008 and this picture will continue for the rest of this year."

Coogan continued, "Government efforts to help housing associations purchase new-build properties and borrowers to save for a deposit are welcome, but are likely to have only a marginal impact on the housing market. The recent reduction in short-term fixed-rate mortgage costs is a small bit of welcome news for hard-pressed households facing significant pressures on their finances from the higher cost of food and fuel, in particular.

"However, borrowers on tight budgets will have to plan ahead to manage higher mortgage payments than they have been used to. Speak to your lender early remains the advice for anyone struggling to pay."