Home loans plummet
Deals for new houses remained close to a record low last month, with approvals for mortgages 65 per cent lower than a year ago.
Mortgage approvals totalled 22,448 last month, according to the British Bankers’ Association (BBA), just above June’s series low of 22,369 but almost 12,000 below the average of the past six months.
In spite of the slight increase compared to June, the BBA warned it was not expecting a housing market recovery anytime soon.
“Overall approval activity continues to be very low. The pressures on household budgets are reflected in the relatively weak rise in individuals’ deposits and, with consumer borrowing growing only slowly it seems that consumers are acting prudently,” said David Dooks, BBA director.
House prices in Britain have fallen around 10 per cent since last August after a decade in which prices almost trebled.
The global credit crunch has forced banks to tighten their mortgage lending terms – many now refuse to offer mortgages to homebuyers with less than a 25 per cent deposit.
And rising unemployment and higher living costs continue to make it difficult for first time buyers to get a foot on the property ladder.
The survey added to evidence pointing to a sharp downturn in a once red-hot property market and reinforced expectations that the next move in interest rates will be down as recession fears build. “The overall trend is record housing weakness as banks continue to constrain their lending,” said James Knightley, economist at Dutch bank ING.