Mortgage lending slowed to a near standstill in August as approvals for new home loans hit a record low, according to the Bank of England.
Net lending was £143m on a seasonally adjusted basis, down from £3bn in July and from £9.1bn in August 2007, the month when the credit crunch began.
The Bank data also showed that the number of mortgages for new house purchases fell to a low of 32,000 – 70% fewer than a year ago – while remortgaging activity has also slowed sharply.
The latest figures come as the markets reeled from the government rescue of Bradford & Bingley, one of the UK’s 10 largest mortgage lenders. B&B had specialised in buy-to-let and self-certified mortgages which did not require proof of income. These loans are profitable to banks so long as house prices are rising but pose risks when house prices fall and homes cannot be sold on at higher prices.
UK house prices have fallen by more than 10% this year alone but the latest data were interpreted by economists as a sign that values have further to go.
Financial Times, The Times