Mortgage Loans at Record Low

Mortgage lending in August slumped to less than half of July’s figure of £4.8 billion, reaching its lowest level since February 2001.

The British Bankers’ Association (BAA) put the sharp decline down to a combination of falling property prices, the present economic problems and financial providers’ tighter lending criteria as a result of the credit crunch.

Speculation that the Government was going to suspend stamp duty also curbed demand during August, as many delayed buying a house in the hope of not having to pay the tax.

The number of mortgage approvals for property purchase continued its downward spiral during August, falling to a new record low of 21,000, 5% less than in July, and 64% less than in the same month of 2007, the BBA stated.

Widespread belief that house prices will continue to fall for some time to come also appears to be stifling housing market activity. Increasing concerns about the economy and job prospects are also contributing to the problem.