Monday June 30, 12:28 PM
New Home Loan Approvals Hit Record Low
By Sky News
The number of mortgages approved for people buying a house sunk to a new low in May, Bank of England figures show. Loans agreed for people moving home fell by 28% to just 42,000 - a third of the number last May. Overall, home loan approvals
- including remortgages - plummeted to a seven-year low of just £4.07bn.Economists had predicted a drop in both approvals and net lending, which strips out redemptions and repayments. But the fall was much steeper than they had been expecting, with net lending down a third on April and 65% below the figure for June last year. Even approvals for people remortgaging, which have been buoyed in recent months by homeowners looking for new fixed rate deals, were down. Around 90,000 home loans were approved for people remortgaging - 10,000 fewer than in April. The figures come after property information group Hometrack reported that house prices fell for the ninth month in a row during June, losing a further 1% of their value. Capital Economics described the latest data as "absolutely dire", saying it pointed to house price falls of 15% to 20% this year. Vicky Redwood, UK economist at Capital Economics, said: "With fixed mortgage rates still rising, don't expect a recovery in housing market activity any time soon." Howard Archer, chief UK and European economist at Global Insight, also expressed concern about the housing market. He said: "(This is) more very disturbing housing market data that adds to already serious concerns over the likely depth and length of the housing market correction." He added Global Insight now expects house prices to lose 24% of their peak value in August 2007.
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