New mortgages fell to 73,000 in February

The Bank of England has reported that the number of new mortgages approved for house purchase fell slightly in February, to 73,000.

The figure is at its lowest for 13 years and represents a 39% decline on lending in February 2007.

Property inflation and a lack of confidence in the housing market are keeping first-time buyers at home with parents or in rented accommodation.

In addition, there has been a large and rapid reduction in the number of loans available because the shortage of liquidity in the money markets has made it difficult for banks and building societies to raise the money needed to lend to customers.

Lenders offering competitive rates are being swamped with applicants; earlier today, First Direct became the latest mortgage provider to close its doors to new customers.

The Bank’s figures show that remortgaging levels also dipped in February, with the number of new loans approved for people who are remaining in their properties falling to 111,000, from 118,000 in January.

Commenting on the figures, Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors, says: “The likelihood is that the level of activity in the housing market will slip further over the coming months as mortgage lenders either temporarily close their doors to new borrowers or lift interest rates.”

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