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Mortgage lending continues to fall

The number of mortgages approved by British high street banks fell to their lowest level in over a year in May, indicating that the UK housing market is continuing to struggle.

According to the British Bankers Association, mortgage approvals fell more than 3% from a year ago to 30,238, while net lending dipped to £73 million from April - the first fall since records began in 1997, as repayments continued to outpace stable gross lending.

These figures underlined the underlying weakness in the global housing market, while the net debt repayments indicated that consumers are unlikely to start spending in the near future.

Speaking to Reuters, IHS Global Insight economist Howard Archer indicated that he expects that house prices are set to fall by around 3%.

He said: “It is very possible that increased worries over the outlook resulting from news that the economy is back in recession and from the situation in the eurozone may well intensify the desire to improve personal finances.”

While the Government has introduced a number of schemes which aim to encourage the flow of credit through the economy by lowering bank funding costs, mortgage rates have still risen despite the record low base rate implemented by the Bank of England.

This was posted in Bdaily's Members' News section by Ruth Mitchell .