A recent report showed how mortgage approval levels for new home buyers in the UK plummeted in May, further reflecting the ongoing housing and mortgage slump that has come about as a result of the global credit crunch. House prices have been falling for some months now, and mortgage availability has been getting tighter Officials have said that these figures indicate that things will get worse before they start to get better.

For the month of May mortgage approval levels hit 42,000, which reflected a fall of 28% on the month. Officials think that there is a combination of factors that have affected mortgage approval levels. This includes consumers getting turned down for finance because of tighter credit conditions that have come into play since the onset of the credit crunch, fewer people applying for mortgages due to affordability problems, and also fewer people applying because they are nervous about getting on the property ladder due to falling house prices.

Mortgage lending started to grind to a halt some months ago, when the mortgage squeeze resulted in lender finding it more difficult to secure finance on the wholesale money market to fund their mortgage lending activities.

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.”

Many are also concerned about the interest rates. Whilst the base rate has come down three times since December, it has now remained static at 5% for some months, and many are concerned that it may even rise again as a result of soaring inflation levels.

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