Brokers blame ‘stingy’ banks as lending hits 10-year low

A row broke out in the mortgage industry today after banks blamed buyer uncertainty ahead of the Spending Review for home loans lending last month growing at its slowest pace for 10 years, but mortgage brokers hit back that banks still weren't lending.

Net mortgage lending from High Street banks grew just £1.6 billion last month, the lowest amount since October 2000, the British Bankers' Association said.

Only 31,104 home loans were approved during the month, down 26% year-on-year and substantially below the average monthly level of 58,871 seen since 1997.

David Dooks, statistics director of the BBA, claimed the fall was due to "household uncertainties" ahead of last week's Spending Review.

He said: "Demand for new mortgages remains low despite more properties on the market and falling house prices."

That view was backed up by Jonathan Samuels, chief executive of specialist lender Drawbridge Finance, who said the figures showed "just how cautious consumers have become", adding: "Despite falling house prices and some very competitive mortgage products, creating almost ideal buying conditions, borrowers overall are continuing to sit on their hands."

However, mortgage brokers poured scorn on that idea, claiming that the low levels of activity in the home loan market was in fact due to the banks' stinginess. Andrew Montlake, director at independent City mortgage broker, Coreco, said: "Figures continue to remain gloomy and the expected pre-Christmas bounce has so far failed to materialise. But this is not simply a case of lack of demand.

"Whilst the fall-out from the Spending Review may make buyers more cautious, it is ever-tightening lending criteria that continues to stifle the needs of many decent borrowers who wish either to remortgage or move into their first property."

Economists were unanimous in predicting that the housing market would come under more pressure.

Howard Archer, at IHS Global Insight, said: "These figures reinforce our belief that house prices will trend down over the final months of 2010 and in 2011 to lose around 10% in value. The market has got very little going for it apart from low mortgage rates – if you can get a mortgage."