News Blog

By Tom Peterkin The Daily Telegraph
26/08/2008



The number of mortgages approved by lenders has fallen by two-thirds over the last year, figures released by a leading banking organisation show.


Value of mortgages has hit a 10-year low


This July, 22,448 new loans for people buying a home were approved during the month, 65 per cent fewer than in July 2007 when 64,184 were recorded.

The value of mortgages approved for house purchase hit a 10-year low during the month, at just £3.2 billion, 69 per cent below July 2007''s figure of £10.3 billion, the British Bankers Association said.

The total value of all mortgages approved also dropped by seven per cent during the month to £11.8 billion, 44 per cent lower than 12 months ago, and well down on the recent six-month average of £16 billion.


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The mortgage approval figures released by the BBA were similar to those recorded in June this year when 22,369 mortgages were approved.

But the dramatic long term fall was another illustration of the effects of the economic downturn and the falling housing market.

Rick Salmon of the BBA said: "There has been this decline in the number of loans approved in the last six months. It is down to a very quiet housing market and partly driven by people not wanting to borrow in the context of house prices falling."

advertisementNet mortgage lending, which strips out redemptions and repayments, levelled out at £4.3 billion, unchanged since June, the BBA said.

Despite the short-term stabilisation, the figure once more represented a substantial fall from the previous year when the equivalent figure was £5.6 billion.

David Dooks, the BBA director of statistics, said: "The monthly numbers of approvals for house purchase, which have fallen by some two-thirds over the last year, levelled off in July.

"It would, however, be premature to think that the housing market will now start to recover, because 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."