Although lending was up 2.5% on the GBP29.2 billion figure for September 2006, the annual increase is the lowest percentage increase in two years.
While lending typically falls between August and September, a 12% decline is larger than the norm of around 5%. This easing in the market is another sign of the expected consumer response to the five interest rate rises experienced since August 2006.
Michael Coogan, director general of Council of Mortgage Lenders, said: We have 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 in the mortgage market.
