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Mortgages for house purchase down 60%, says BBA

Mortgage approvals for house purchase dropped 60 per cent in November compared to the same month last year to a new low of 17,773.

The figures from the British Bankers’ Association show remortgage approvals were down nearly 50 per cent year on year to 29,798.

November approvals for house purchase and remortgages were also below October’s figures and the average for the past six months.

BBA statistics director David Dooks says: “High street banks are still providing two-thirds of all new mortgage lending, although the overall market continues to shrink.

“The 1.5 per cent November reduction in Bank of England base rate caused lenders to re-assess product ranges and borrowers to re-consider future borrowing costs, so consequently there was another drop in market activity.

“Volumes of mortgage approvals reached new lows and, with house prices still falling, the encouragement of lower costs had not filtered through by the month-end, largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances.

“There was an increase in deposits, in part reflecting the receipt of savings reclaimed from accounts in Icelandic banks.”

Conservative Shadow Chief Secretary to the Treasury, Philip Hammond, says: “The news that mortgage approvals are nearly two thirds lower than last year is yet more evidence that Gordon Brown’s bank recapitalisation package is failing to revive Britain’s flagging housing market.

“It appears that the Prime Minister is more interested in saving the world than about getting credit to the families, homeowners and businesses who need it.

“He must act now to adopt our proposal for a National Loans Guarantee Scheme if he wants to rescue the economy and not just the banks.”

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