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New low for UK mortgage approvals New low for UK mortgage approvals
(10 minutes later)
The number of new mortgages being approved for house purchase in Britain has dropped heavily for another month.The number of new mortgages being approved for house purchase in Britain has dropped heavily for another month.
The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago.The Bank of England said 42,000 homes were approved in May, a 28% fall compared with the previous month and 64% down on a year ago.
This is the lowest since the Bank began reporting the figures in 1993 and lower than many analysts' predictions.This is the lowest since the Bank began reporting the figures in 1993 and lower than many analysts' predictions.
Mortgage lending has slumped owing to the credit crunch with institutions reducing their willingness to lend.Mortgage lending has slumped owing to the credit crunch with institutions reducing their willingness to lend.
The number of home loans approved have now fallen for 13 consecutive months, the Bank's figures show.The number of home loans approved have now fallen for 13 consecutive months, the Bank's figures show.
Housing marketHousing market
Philip Shaw, chief economist at analysts Investec, described the figures as "terrible".Philip Shaw, chief economist at analysts Investec, described the figures as "terrible".
The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices Ed StansfieldCapital Economics
"It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity," he said."It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity," he said.
Recent figures from the British Bankers' Association on the number of new mortgage approvals to home buyers also showed a big drop, by 20% in May compared with April. Recent figures from the British Bankers' Association (BBA) on the number of new mortgage approvals to home buyers also showed a big drop, by 20% in May compared with April.
It blamed tighter lending criteria and a squeeze on household finances for the drop. It blamed tighter lending criteria and a squeeze on household finances for the drop. BBA members account for about two-thirds of total UK mortgage lending.
The Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.The Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.
The Land Registry revealed last week that the number of house sales slumped by 50% in March compared with the same month in 2007.The Land Registry revealed last week that the number of house sales slumped by 50% in March compared with the same month in 2007.
 'Change in attitude'
Have you had difficulty getting a mortgage? You can send us your experiences using the form below: The Bank of England figures also showed a drop in the number of mortgage approvals for homeowners who were remortgaging.
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House price figures for June will be revealed in the next few days
That figure fell to 90,000 in May, down from 100,000 the previous month and below the monthly average over the previous six months of 104,000.
Mortgage lending as a whole showed its weakest rise for seven years at £4.1bn - some £3bn down on the average for the previous six months.
The general figures were weaker than many economists had predicted.
"They are clear evidence in the change in attitude among mortgage lenders and home buyers," said Ed Stansfield, of Capital Economics.
"People no longer want to borrow and those that do want to borrow are not being allowed to by the lenders.
"The implications of this is that the market is going to remain pretty weak for some time with a significant downward movement in house prices. We are off the scale. We have never been anywhere near as low as this in activity levels and mortgage approvals."
Major lenders will reveal their house price figures for June in the next few days.
The UK's biggest mortgage lender, the Halifax, recently suggested that UK house prices would drop by 9% this year, a more severe fall than its previous forecast.