Labour is blamed as home loans slump

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The Council of Mortgage Lenders said banks and building societies are struggling to issue home loans because savers are withdrawing deposits used to fund lending and putting them into state-owned National Savings and Investments.

Director general Michael Coogan said: "Banks and building societies have seen savings ebb away to NS&I, which has a negative impact on their ability to lend. 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."

The CML said mortgage lending amounted to £9.9 billion last month, down 15% from the £11.7 billion lent in January and 60% on February last year. Meanwhile, a CBI survey showed factory orders fell this month at the sharpest rate since 1992.