The Bank of England has reported that the number of new mortgages being approved for house purchase in April was the lowest since the Bank began reporting the figures in 1993.
Just 58,000 such mortgages were approved which was 8% fewer than in March and nearly half the level of lending that was approved in the same month in 2007.
Mortgage lending is expected to slump this year because of the credit crunch and an unwillingness of banks and other lenders to lend. Both the number of loans approved, and the amount of money offered to borrowers, has now fallen for 12 months in a row.
Both the Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have warned that property sales this year would fall by between 35% and 40%.
The chief economist at RICS - Simon Rubinsohn – has warned that this downturn would have a big knock-on effect on the wider economy saying, "Lenders are continuing to tighten up on the conditions accompanying new loans making it hard for first-time buyers to take advantage of the modest fall in house prices seen over the part few months. A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancillary industries."
According to recent figures from the National House Building Council planning applications for new houses are currently 27% lower than a year ago.
Read related items on:
Bank of England
Council of Mortgage Lenders
Royal Institute of Chartered Surveyors