New mortgage approvals down 58%

The Bank of England has reported a slight rise in new mortgage approvals.

During December, 31,000 home loans were approved for new purchases, up from 27,000 a month earlier.

However, the figure is the second-lowest on record, having edged ahead from the nadir of November.

According to the Bank, new mortgage approvals fell by 58% during 2008 with a total of 519,000 approvals during the year.

The figures sit alongside those published by the British Bankers’ Association, which recently reported that its members sanctioned 22,000 new home loans in December, up from 17,000 in November.

Year-on-year, the association’s figures show a 52% decline in new mortgage lending during 2008.

The outlook for 2009 is bleak; the recession is set to deepen and unemployment to rise.

Confidence in the UK housing market is at an all-time low, with analysts predicting price falls of up to 15% this year and a peak to trough fall of around 30%.

Meanwhile, Nationwide Building Society estimates that 1.2 million households are already in negative equity, compared to less than 100,000 a year ago.

The only good news on the housing market for this week came from mform.co.uk, the mortgage search engine, which reported that first-time buyer mortgage applications have increased in response to a small rise in the number of lenders offering deals with loan-to-value ratios of 90%.

There are now 21 such providers, up from 18, according to mform.

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