Financial News

The number of mortgage approvals sank to a new record low of 33,000 in July, the Bank of England has said.

This was 2,000 fewer than in June, and down from 114,000 in July last year, according to the Bank.

Approvals have now fallen for the 12th straight month and are 71% down on a year ago.

The figures are the lowest since records began in April 1993 as banks get stricter on lending criteria in response to the credit crunch.

Announcing the news, the Bank pointed to further sharp falls in house prices in the coming months.

The weaker than anticipated figures are likely to add to expectations that interest rates could fall before the end of the year as the property slump is being felt across the economy.

Howard Archer, chief UK and European economist at Global Insight, said: "The very weak Bank of England mortgage data shows that housing market activity continues to be throttled by stretched affordability and ongoing very tight lending conditions."

Mortgage lending rose by £3.231bn in July, slightly stronger than expected but about a third of the increase seen in the same month last year.

The new figures come as the Royal Institution of Chartered Surveyors (RICS) claimed ministers' attempts to drag the the market out of the doldrums have been "limited".

It said the Government needs to take "significant and decisive action" to kick start the housing market with a series of rescue measures and reforms.

The Government is expected to unveil measures to help struggling homeowners and first-time buyers on Tuesday.

Initiatives are set to include improved support for people facing repossession and shared equity schemes for those trying to get on the property ladder.

Housing sales are at their worst level for 30 years with estate agents averaging just over one property sale a week in the three months to July, according to the latest research.