Banks see mortgage market slowdown

New figures reveal that many banks are having to cope with a slowdown in demand for mortgages.

The latest data shows that although there has been a rise in property market activity, there has been evidence of a mortgage market downturn for the country’s leading providers.

According to figures from the Council of Mortgage Lenders (CML), a total of £16.9 billion was lent by CML members – down nine per cent compared to the previous month’s £18.6 billion and fairly static compared to November 2013 levels.

CML economist Mohammad Jamei said: “Current activity in the housing market has eased with transactions back down to levels seen almost a year ago.

“The reform in stamp duty is likely to provide a modest short-term boost in activity over the next few months, but its impact will fade away in the medium term.”

According to the council, lending is expected to grow over the next two years, but it is expected to be at a gradual rate rather than a sharp upsurge.

The CML is warning that the ongoing fall in real incomes and the continued rise in prices is having an impact on affordability, which will limit sales.

Although this is unlikely to lead to a downturn in the property market, the council has raised concerns it could leave some providers exposed if recessionary conditions develop across the economy.

Recently, the major banks were subjected to a number of stress tests by the Bank of England to assess whether they are currently overexposed if economic conditions deteriorated.  All of the banks passed the tests, apart from the Co-operative Bank, which will now have to make changes to its holdings to limit the risks faced by customers.  

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