Figures released this week by the Council of Mortgages Lenders (CML) confirmed what we have long suspected – the number of new mortgages dropped drastically in 2008.
The number of people buying a home fell to its lowest level since 1974 during 2008 as the mortgage shortage crippled the housing market, figures showed on Thursday.
Only 516,000 mortgages were taken out for house purchase during the year – 49% fewer than during 2007, according to the Council of Mortgage Lenders.
First-time buyers were particularly hard-hit by the problems in the mortgage market, with just 194,200 people getting on to the property ladder during the year, the lowest level since the CML first began collecting data nearly 35 years ago.
Need for larger deposits
Those who were able to buy their first home had to put down a record deposit of an average of 22% of their property’s value, as lenders reduced the loan-to-value ratios they were prepared to advance.
People remortgaging were also hit by the credit crunch, with 18% fewer people switching to a new deal when their current loan came to an end.
The fall is likely to be due to a combination of low standard variable rates – the rate that most borrowers revert to after their existing deal comes to an end – and tighter lending criteria, giving people little choice but to stay where they were.
Overall, net lending for 2008, which strips out redemptions and repayments, slumped to £39.7 billion, from £108.2 billion a year earlier.
If you are looking for a new mortgage visit our mortgage finder for the best deal.
Which? news RSS Feeds
For daily consumer news, subscribe to the Which? news RSS feed here.
If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml .
Find out more about RSS in the Which? guide to news feeds.
Or why not get weekly updates and money saving tips delivered to your in-box by subscribing to the Money Email?