Fewer and fewer people are taking out home loans, banks said today.
Mortgage lending from banks for house purchase was at its lowest level on record in May, the British Bankers' Association (BBA) confirmed today.
Home loans approvals for buyers were found by the group to have fallen by 20 per cent from April, reaching just 28,000 across the month. This total is also 56 per cent down on the equivalent figure for May 2007.
The credit crunch, which has led to a marked decline in mortgage lending and a general tightening-up of credit criteria for borrowers, has been widely blamed for the recent downturn in the property market. According to the UK's biggest lender, HBOS, house prices in the UK are currently falling at around 2.5 per cent a month.
BBA also found that the value of house purchase mortgages approved declined from £5.4 billion to just £4.3 billion from April to May, with net mortgage lending showing a similar downturn. Gross mortgage lending for May also fell, going from £17 billion to £16.2 billion.
Commenting on the figures, BBA statistics director David Dooks said: "Measures of mortgage activity were lower in May as a result of tighter lending criteria and economic pressures on households.
"Only remortgaging business is holding up, where people need or want to take advantage of deals with other lenders."
