Mortgage approvals dive
Updated on 29 July 2008
Mortgage approvals dived by nearly 70 per cent during the past year to hit a new low, figures have shown.
In June, just 36,000 new loans were arranged for people moving house, 69 per cent fewer than in the same month of 2007 and 12 per cent less than in May, according to the Bank of England.
Mortgage lending also dropped steeply during the month, with net advances hitting a near eight-year low of £3.1 billion.
Meanwhile, there is no quick fix for the UK's stricken mortgage market, a Government-commissioned study is expected to say.
The former head of HBOS, Sir James Crosby, has said the log-jam in home loan funding will continue for some months yet and should be left to the market.
But the Crosby Review is thought to have stopped short of making recommendations on how to tackle the problems caused by the credit crunch.
According to reports, the independent review concludes the UK should avoid US-style government-backed agencies to tackle the funding crisis.
The only firm conclusion thought to have been made in the review is that the Government and the Bank of England should steer clear of propping up the mortgage market.
Meanwhile, the Bank of England has said the number of mortgages approved for house purchase fell to a new record low of 36,000 in June.
Sir James, who was appointed by Chancellor Alistair Darling to lead the review in April, is mooting the idea of possible further support from the Government on a temporary basis to help kick-start mortgage lending, but banks and building societies will have to wait for the second report in the autumn for his final conclusions.
The Chancellor is also understood not to be planning to make any announcements on the issue until the Pre-Budget Report.
The move has angered lenders, with the Council of Mortgage Lenders saying earlier this month that the Government must "act swiftly" to resolve the current mortgage drought.
It warned that mortgage lending was set to halve this year, with the lack of financing expected to further hit the UK's property market and housebuilding sector.
Lenders have been lobbying Mr Darling for the scope of the Bank of England's £50 billion special liquidity scheme to be widened to allow banks to trade in securities backed by new mortgages in return for more easily tradable Government bills.
The scheme currently only applies to old mortgage assets held before the start of the year and lenders are anxious that the existing package is not enough to ease the deepening credit crisis.
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