According to a recent report May’s mortgage approval levels hit a record low in the UK, with approvals of homeowner loans plummeting, indicating that house prices will fall sharply over the coming months.
Recent figures have already shown significant falls in house prices over recent months, but these bleak mortgage approval figures could mean that the situation is worse that was initially anticipated.
Figures from the bank of England showed a fall of 28% on the month, with mortgage loan approval levels hitting a low of 42,000. Industry officials had been predicting that mortgage approval figures for the month would be nearer to the 51,000 mark.
The actual figure was a staggering 64% lower than May 2007, showing just how dramatically the global credit crunch and falling house prices have affected the whole industry.
One industry official stated: "Terrible. There is no other way of describing them. It is really symptomatic of what is going on the housing market. The real danger is there is a knock-on effect to consumer activity."
The global credit crunch has resulted in a logjam in the wholesale money markets, and this in turn has resulted in mortgage lenders really tightening up on their lending criteria.
In addition the situation is being affected by the base rate, which has stayed on hold in May and June. This is because the Bank of England has also been struggling to try and keep inflation levels down and bring them back towards the target level of 2% after they soared to 3.3%.
Some officials state that the weak lending figures indicate that the housing downturn is only just beginning and things are set to get a lot worse in the mortgage and housing industries.