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| Mortgage approvals hit record low | Mortgage approvals hit record low |
| (10 minutes later) | |
| The slowdown in the UK mortgage market continued in March, according to figures from the Bank of England. | The slowdown in the UK mortgage market continued in March, according to figures from the Bank of England. |
| It said the number of new mortgages approved for house purchases in March fell to a record low of 64,000, down from 72,000 the previous month. | It said the number of new mortgages approved for house purchases in March fell to a record low of 64,000, down from 72,000 the previous month. |
| This was the lowest level since the bank started collecting the data in April 2003, and was down 44% on the figure for the same month in 2007. | This was the lowest level since the bank started collecting the data in April 2003, and was down 44% on the figure for the same month in 2007. |
| However, credit card and other lending increased in March from February. | However, credit card and other lending increased in March from February. |
| Weakening market | Weakening market |
| A global credit crunch has caused lenders to put up prices on mortgages and withdraw mortgage deals, especially for those unable to put down a significant deposit, in recent months. | A global credit crunch has caused lenders to put up prices on mortgages and withdraw mortgage deals, especially for those unable to put down a significant deposit, in recent months. |
| Lenders will remain cautious Vicky Redwood,Capital Economics | |
| The credit crunch, when banks are less willing to lend to each other and consumers, was caused by problems in the US housing market, which saw a surge in mortgage defaults and a drop in property values. | The credit crunch, when banks are less willing to lend to each other and consumers, was caused by problems in the US housing market, which saw a surge in mortgage defaults and a drop in property values. |
| In the UK, property prices have also started to dip during 2008, according to various housing surveys. | In the UK, property prices have also started to dip during 2008, according to various housing surveys. |
| "The news that mortgage approvals dropped to a record low of 64,000 is hardly surprising given that lenders have been aggressively scaling back on the provision of finance to homebuyers," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics). | "The news that mortgage approvals dropped to a record low of 64,000 is hardly surprising given that lenders have been aggressively scaling back on the provision of finance to homebuyers," said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics). |
| The Bank also reported a drop in loans approved for remortgaging, down 11,000 in March from the previous month at 98,000, and for other purposes such as buy-to-let, down 6,000 at 57,000. | The Bank also reported a drop in loans approved for remortgaging, down 11,000 in March from the previous month at 98,000, and for other purposes such as buy-to-let, down 6,000 at 57,000. |
| Net lending secured on homes was £6.9bn and led to another monthly fall in the annual growth rate, down from 9.4% in February to 9.1% in March. | Net lending secured on homes was £6.9bn and led to another monthly fall in the annual growth rate, down from 9.4% in February to 9.1% in March. |
| Cautious lenders | |
| The figures come a week after the British Bankers' Association (BBA) said new mortgages approved for house purchases in March were 46% down on the same month in 2007, and the lowest monthly figure since September 1997. | |
| The rise in credit card lending was in line with the previous month | |
| In an attempt to ease banking concerns and help them operate during a global credit squeeze, the Bank of England announced a plan that would let lenders swap potentially risky mortgage debts for secure government bonds. | |
| But lenders have continued to withdraw mortgage offers for new customers, with Nationwide the latest to do so as it announced that, from 1 May, all but two mortgages would require a 10% deposit. | |
| "The Bank of England's Special Liquidity Scheme, if it works, might stop things getting much worse. But lenders will remain cautious," said Vicky Redwood, UK economist at Capital Economics. | |
| And while the mortgage market may be drying up, people are still borrowing more money on credit cards, or through loans and overdrafts, according to the Bank of England figures. | |
| However, the March figures did not mirror the leap in unsecured lending seen in February. | |
| Net credit card lending rose by £400m, in line with the increase in February. Other loans and advances increased by £900m, lower than the rise of the previous month. | |
| All the Bank of England figures have been seasonally adjusted. |