CML: Government policies hurt mortgage lending

25 March 2009

The Council of Mortgage Lenders (CML) has suggested that the Bank of England`s recent base rate cuts have reduced the funds required by lenders for loans and mortgages.

The CML revealed that mortgage lending in February had fallen by 60%, compared with the same month last year, to an eight-year low.

It said that this had been caused by savers increasingly moving to Government-owned National Savings and Investments (NS&I), rather than high street banks and building societies, which has reduced the funds available for mortgages and loans.

The claims echo previous criticisms of the Bank of England`s recent base rate cuts - with many analysts claiming that lower interest rates would discourage people from saving, which would subsequently harm lenders` ability to offer loans and mortgages.

A mortgage expert for Think Money said: "Mortgage lending has been affected by a general lack of funding in recent months, but it`s important people realise that mortgage deals are still on offer, even if it takes a little longer to find the right one."

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Tags: mortgage, mortgages, mortgage lending, government, interest rates, base rate, base rate cut, low interest, savings, The Council of Mortgage Lenders

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