Mortgage lending continues to decline

Gross mortgage lending declined to an estimated £9.9 billion in February, down 15% from £11.7 billion in January and 60% from February 2008, according to new data from the Council of Mortgage Lenders.

This is the lowest monthly lending figure since February 2001.

February is typically the weakest month for mortgage completions. And although this is a larger decline than the 3-4% usually experienced between January and February, it is in-line with our forecast of £145 billion gross mortgage lending in 2009.

Michael Coogan, CML director general, said: "Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings and Investments, which has a negative impact on their ability to lend.

"This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more. At the same time, the government's own savings institution is sucking away the funds that would enable them to do so. Until funding improves, the capacity of lenders to lend will remain constrained."