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UK home loans decline to lowest point

MORTGAGES in the United Kingdom fell to the lowest level in eight years in February, typically the slowest month of the year for home loans, the Council of Mortgage Lenders said yesterday.

Gross lending in February was 9.9 billion pounds (US$14.1 billion), down 15 percent from January and a massive 60 percent from February 2008, the report said.

Michael Coogan, the council's director general, said government policy was aggravating the problem of reduced mortgage availability, particularly by offering 100-percent guarantees on unlimited deposits at National Savings & Investments.

NS&I savings products are available at post offices, and the agency's growing market share of the British savings market reached 8.1 percent in November. Gross inflows have more than doubled since mid-2008 to reach 9.55 billion pounds by the end of the year.

"Retail savings are now the predominant source of funding for mortgages. But banks and building societies have seen savings ebb away to National Savings & Investments, which has a negative impact on their ability to lend," Coogan said. "This is yet another example of fractured policy. There are now fewer active lenders in the market, but the government wants them to lend more. At the same time, the government's own savings institution is sucking away the funds that would enable them to do so."


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