According to the trade body, gross lending fell by 12 per cent in September, compared to the August findings, with the drop 7 per cent more than the usual 5 per cent fall during this period.
However the CML did reveal that lending increased by 2.5 per cent from the September 2006 findings, although this represented the lowest percentage increase in two years.
Michael Coogan, director-general at the CML, expected a drop and suggested that the issue of financial liquidity was to blame for the larger than usual market downturn.
He said: “We’ve been expecting a slowdown in monthly lending levels in line with interest rate rises. In the coming months, we expect to see monthly lending levels dip below their 2006 levels for the first time this year as rate effects are exacerbated by the recent liquidity problems.”
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), added: “Mortgage lending remains higher than the same period last year, yet recent months have seen a marked slowdown in lending volumes in response to the previous interest rate hikes, stretched affordability and the impact of the Northern Rock episode. RICS expects activity to slow further into the New Year. 2008 will see a subdued market and little or no change in property prices.”
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