Only 42,000 gained approvals in May, down 64 per cent from 12 months ago and the lowest figure since the Bank began reporting the figures in 1993.
The figures have now dropped for 13 consecutive months as lenders continue to tighten their belts in the credit crunch.
Propertyfinder.com director Nicholas Leeming says the figures are not down to a slowing in people looking to move, but mortgage lenders not “playing fair” with mortgages.
“Rates have been jacked up and terms tightened to unaffordable levels. People are left with no option but to stay put and the slowdown in the housing market is spilling over to impact on other areas of the economy. The Bank of England needs to get the housing market moving again and if rate cuts are not the answer because of its inflation fears then more liquidity for the capital markets certainly is.’”
Hometrack strategy risk and economics director Gary Styles says :”The latest Bank of England mortgage data for May shows that the sharp slowdown seen in the house purchase market has started to spread to the remortgage sector. In recent months the remortgage sector has remained firm while the house purchase market has continued to decline.
The latest data shows that remortgage lending fell by 10 per cent in May and house purchase recorded a 28 per cent fall in the month. It has been the remortgage sector that has sustained the mortgage market in the last 6-8 months as the house purchase market evaporated. If we see a continued erosion in the remortgage market the total mortgage market will experience a very sharp fall in volumes by the end of this year.”