Mortgage approval rate spirals downward
Mortgage approvals for house purchase slumped to a 19-month low during October as potential buyers continued to stay away from the market, figures reveal.
Just 30,766 home loans were approved by the major banks for people buying a property during the month, the lowest level since March 2009, when house prices were still falling, according to the British Bankers' Association.
Total mortgage advances also dived to a near 10-year low, with just £7.6bn lent, a level last seen in February 2001.
Net lending, which strips out redemptions and repayments, was up slightly on the previous month at £1.7bn, but was still 43% lower than in October last year.
The figures highlight the current subdued state of activity in the housing market, as potential buyers sit on their hands until the outlook for property prices and the impact of government spending cuts becomes clearer.
The lack of buyers is putting downward pressure on prices, with mortgage approvals for house purchase running at less than half the level of 70,000 to 80,000 a month thought to be consistent with a stable market.
Howard Archer, chief UK and European economist at IHS Global Insight, said housing market activity is stuck in the doldrums.
"The BBA data showing mortgage approvals edging down further to a 19-month low in October reinforces our belief that house prices will trend down to lose around 10% from their peak 2010 levels by the end of 2011," he said.
There was a slight rise in the numbers remortgaging in the month, although at 24,112, the figure was less than half the level seen before the credit crunch hit.