The housing slump seems set to worsen after official figures revealed yesterday that mortgage lending dived by nearly 70 per cent in October.
The Bank of England's latest report on the mortgage market revealed that net lending on homes, which strips out redemptions and repayments, reached just £459m during the month.
This is the second lowest figure recorded by the Bank of England since it began to collect data in this format in 1993.
At 32,000, the number of new mortgages was also at a low, down on the 33,000 seen in September, and disastrous when set against the 72,000 a month they were running at the end of 2007.
Just 460,000 mortgages have been approved over the year to date — compared with 1,098,000 over the same period in 2007.
The credit crunch has long choked off the supply of lending to the market, and there is now increasing evidence that the falls in house prices recently seen – running at 15 per cent annual rate of decline — are also depressing demand for mortgages.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, said: “Interest rate cuts and falls in inter-bank lending has not yet encouraged activity to rise in the UK mortgage market.
“First-time buyers and homeowners alike are still struggling to buy a property as banks are still requesting sizeable deposits, further stagnating the property market,” said Mr Rubinsohn.
“This will continue unless banks begin to loosen up on lending conditions.”
The Bank of England figures also showed an increase in unsecured borrowing, with lending through credit cards, overdrafts and loans rising by £844m in October, up from the previous month's very weak increase of £345m.