Home Loan Approvals Slump To 12-Year Low

Mon, 04 Feb 2008

The number of approvals for home loans in the UK has fallen to its lowest level in over 12 years, according to new figures from the Bank of England (BoE).

The Bank said just 73,000 new loans were approved for people moving home during January - the lowest figure since July 1995.

The number of approvals for house purchases has also fallen by ten per cent since November, which has been interpreted by some industry experts as a clear sign that potential buyers are being put off house buying amid reduced consumer spending as a result of the Northern Rock crisis and stock market mayhem.

However, the drop could also be due to a tightening in lending criteria by mortgage providers .

A total of 226,000 new home loans worth £25.4 billion were approved during December - a fall by more than £3 billion on the 262,000 average for the previous six months.

Howard Archer, chief UK and European economist at Global Insight, said: "Housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices ."
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