The number of new mortgages approved for home buyers fell in July to just 33,000 - down by 71% on a year ago.
The number of new mortgages approved for home buyers fell in July to just 33,000 - down by 71% on a year ago.
The figures from the Bank of England are a new record low and highlight the sharp slump in mortgage lending in the course of the past year.
The figures from the Bank of England are a new record low and highlight the sharp slump in mortgage lending in the course of the past year.
The credit crunch has forced banks and building societies to ration their lending to only their most creditworthy borrowers.
The credit crunch has forced banks and building societies to ration their lending to only their most creditworthy borrowers.
Lenders say house prices have fallen by 10% since the start of 2008.
Lenders say house prices have fallen by 10% since the start of 2008.
"Activity in the housing market continues to be depressed, and the approvals figures suggest this is likely to continue for some time," said Adrian Coles of the Building Societies Association (BSA).
"Activity in the housing market continues to be depressed, and the approvals figures suggest this is likely to continue for some time," said Adrian Coles of the Building Societies Association (BSA).
"Recent falls in house prices have been widely publicised, reducing potential buyers' confidence and keeping them out of the market," he added.
"Recent falls in house prices have been widely publicised, reducing potential buyers' confidence and keeping them out of the market," he added.
In fact, for the second month in a row, building societies saw their mortgage lending contract.
Contraction
For the second month in a row, building societies saw their mortgage lending, to all types of borrowers, contract.
Yet another low for mortgage activity offers little hope that house price declines will find a floor any time soon Oliver Gilmartin, Rics
Redemptions from customers who were paying off their loans outstripped new lending by £79m.
Redemptions from customers who were paying off their loans outstripped new lending by £79m.
That was only the second time this has happened in recent years.
That was only the second time this has happened in recent years.
But bank lending to all mortgage borrowers, whether moving house or not, shrank by £12.1bn in July - far and away the biggest monthly contraction on record.
"Yet another low for mortgage activity offers little hope that house price declines will find a floor any time soon," said Oliver Gilmartin of the Royal Institution of Chartered Surveyors (Rics).
"With the barrier of mortgage finance fortified by the day, pent-up demand will only exacerbate the boom-bust cycle once a return to normal market conditions resumes," he warned.
The collapse in business by specialist lenders other than banks and building societies, such as those specialising in sub-prime mortgages, is also illustrated by the Bank of England's figures.
In July 2007 these lenders gave out 32,000 mortgages for house purchase; in July 2008 they lent just 2,000.
Higher savings
Higher savings
New lending to house buyers is currently dominated by just a few big High Street banks.
New lending to house buyers is currently dominated by just a few big High Street banks.
In July banks approved 24,000 loans for house purchase, compared to just 7,000 by building societies.
In July the banks approved 24,000 loans for house purchase, compared to just 7,000 by building societies.
But the societies have found that their inflow of cash from savers continues to be very buoyant, as attractive interest rates have been drawing in much higher savings.
But the building societies have found that their inflow of cash from savers continues to be very buoyant, as attractive interest rates have been drawing in much higher savings.
Building societies saw the money saved with them rise by £1.435 billion in July, compared to £723 million in July last year.
Building societies saw the money saved with them rise by £1.435 billion in July, compared to £723 million in July last year.
The collapse in business by specialist lenders other than banks and building societies, such as those specialising in sub-prime mortgages, is also illustrated by the Bank of England's figures.
Overall the situation in the housing market was now "very disturbing" according to Howard Archer of Global Insight.
In July 2007 these lenders gave out 32,000 mortgages for house purchase; in July 2008 they lent just 2,000.
"The very weak Bank of England mortgage data show that housing market activity continues to be throttled by stretched affordability and ongoing very tight lending conditions, and point to further marked falls in house prices over the coming months," he said.
"Global Insight forecasts house prices to fall by 15% in 2008 and 12% in 2009," he added.
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