Mortgage Informer

U.K. mortgage approvals matched the lowest since at least 1999 in October as the financial crisis intensified, prompting banks to hoard money and curb loans.

Lenders granted 32,000 loans for house purchase, down from 33,000 in September, the Bank of England said today in London. The result was the same as the median forecast of 30 economists in a Bloomberg News survey, and matched the figure for August, the lowest since the data began almost a decade ago.

Mortgage lending into the property market in effect collapsed during May, according to the latest figures from the Bank of England. The number of mortgages approved for house purchase fell to just 42,000 – the lowest figure recorded by the Bank since it began collecting this information 15 years ago.

Economists described the numbers as “alarming”, “terrible” and “absolutely dire”. Lending is now 70 per cent below the peak registered in November 2006; 60 per cent down on May last year; and 27 per cent down on April. Mortgage lending is running at about half the level seen in the last housing recession in the early 1990s.

Mortgage lending slumped by 19 per cent in the year to May, as first-time buyers faced increasing difficulties in securing new home loans from cautious banks.

Gross mortgage lending reached an estimated ?25.5 billion, signalling a 19 per cent fall compared with May 2007 when it totalled ?31.5 billion. Compared with April, gross lending in May fell by 2 per cent.

The Council of Mortgage Lenders (CML) said that remortgaging activity remained strong, implying that existing homeowners are supporting a market where first-time buyers are being forced to pay more to secure mortgages at increasingly expensive rates.