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Home loans down as crunch takes hold

The credit crunch took a bite out of the home loan market in January, according to the Council of Mortgage Lenders (CML).

The industry body said fewer people were borrowing and those who were borrowing, were seeking less money.

This confirms what most analysts have been saying - that mortgages have become less affordable as a result of the global liquidity squeeze.

"The wholesale funding markets remain largely closed and mortgage funding still remains constrained," said CML director general Michael Coogan.

"This is now having a discernible impact on lending criteria and the ability of first-time buyers to get into the housing market.

Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors (Rics), added: "This ties in neatly with the results of the latest Rics survey which showed new buyer enquiries continuing to slide.

"Not only is the volume of mortgages falling sharply but loan to value ratios are also being reduced."

The mortgage market is not expected to recover any time soon with lenders still finding it difficult to raise credit themselves.

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