The number of new mortgages approved for home buyers fell in July to just 33,000 - down by 71% on a year ago.
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WW1 fly past to mark oldest veteran's birthday ... 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.
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).
"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.
Redemptions from customers who were paying off their loans outstripped new lending by Ј79m.
That was only the second time this has happened in recent years.
New lending to house buyers is currently dominated by just a few big banks.
But building societies have found that their inflow of cash from savers continues to be very buoyant as attractive interest rates have been drawn in much higher savings.
Building societies saw the money saved with them rise by Ј1.435 billion in July, compared to Ј723 million in July last year.
(BBC)
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