Recent figures show that mortgage approval levels have been plummeting over recent months, with the number of mortgage approval levels falling to 64,000 in March. This was a 44% drop from the same period a year earlier, and was the lowest level since records began in 1999. The falling figures have stemmed from the global credit crunch, which has resulted in lenders tightening up on their lending criteria as well as falling house prices, which has put many people off making a purchase.

One broker spoke about the reasons behind the falling mortgage approval levels, stating: “First of all a significant number of lenders have just pulled out of the market completely and also it’s the big lender groups that have actually got access to funds.”

Another industry official added: “The news that mortgage approvals dropped to a record low of 64,000 is hardly surprising given that lenders have been aggressively scaling back on the provision of finance to homebuyers.”

The Bank of England has put forward a £50 billion mortgage rescue plan, which is designed to enable lenders to swap mortgage assets for government bonds, which is aimed at increasing confidence and liquidity, but this could take some time to kick in.

One official said: “The Bank of England’s Special Liquidity Scheme, if it works, might stop things getting much worse. But lenders will remain cautious.”

Mortgage lending levels have continued to slump, and with house prices falling as well the mortgage and housing markets in the UK face a very bleak couple of years according to industry officials. Earlier this week Caroline Flint, the housing minister, inadvertently indicated that the government expected house prices to fall by 5-10% this year.

Recent additions:

• Credit crunch means slump in mortgage lending
• Could you be entitled to a break in monthly mortgage repayments?
• Nationwide asks for larger deposits from borrowers
• UK Mortgage lending levels remain subdued
• How will government help struggling homeowners?

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