Analysis from Connells Survey & Valuation shows a huge drop in mortgage approvals, with figures down by 21 per cent in December from November and showing a 43 per cent fall from December 2006.
Approvals for home purchase fell to 66,000 from 83,500 in November.
The analysis reveals mortgage approval trends in advance of the Bank of England’s official figures. Up to November 2007, it has shown a 98.9 per cent correlation with BoE data.
The mortgage decline follows the tightening of credit availability, a fall in confidence among homebuyers and disruption caused by the extension of home information packs across all properties.
Managing director Ross Bowen says: “Mortgage approvals have been falling since January last year but this decline accelerated in the second half of the year and was most acute in December. With the credit squeeze following five successive increases in interest rates, mortgage borrowing has become even more expensive, and some borrowers are finding themselves unable to access funds.”
“This has led to a significant reduction in transaction levels. There are no signs that December’s base rate cut has provided a catalyst for improvement and we urge the Bank of England to implement the next cut in rates in February to help start the process of restoring confidence to the markets.”