Mortgage approvals remained close to decade lows in February despite a period of relative calm in markets, Bank of England data showed yesterday, suggesting the latest signs of strain among lenders could trigger further weakness in house prices. Financial Times

The Bank said the number of mortgages approved for house purchase fell from 74,000 in January to 73,000 in February, broadly similar to the level in recent months but almost 40% lower than a year earlier. Net mortgage lending was stable at £7.4bn, well below the previous six-month average, after a sharp contraction in loans by the specialist lenders most dependent on wholesale market funding.

The figures confirm the effect tensions in money markets are having on the cost and availability of mortgages, coming a day after First Direct suspended new mortgage lending and other banks raised rates charged to existing customers.

With these latest developments likely to depress transaction numbers even further, the housing market is rapidly becoming a political battleground.