The construction sector has been hit hard by the decline in mortgage approvals, it has been suggested.
Britain's homebuilders are increasingly resorting to renting out newbuild properties themselves, as troubles in the UK mortgage market continue.
According to analysis from the Bank of England, builders have begun letting new homes, having given up on selling them in the current conditions. Previous figures from the Bank have shown that mortgage approvals numbers are running at around half the level of a year ago.
News of the trend comes as Britain's largest mortgage firm announced that it will soon cease trading as an independent entity - testifying to the continuing troubles being faced by the mortgage market.
HBOS was taken over this morning by Lloyds TSB for £12 billion, a fraction of the firm's value just months ago. The lender had suffered very steep declines in stock value over recent days, with investors apparently convinced that it remained undercapitalised and would struggle to meet its costs in the credit crunch.
Shares in the firm were even trading at 50 percent below Tuesday's closing price at one point on Wednesday morning - an unusually drastic erosion of market sentiment. The Lloyds takeover has received the full backing of the government, nervous of an HBOS bank run and collapse that would have dwarfed last year's Northern Rock crisis in financial significance.
Commenting on the Bank's analysis Roger Humber, housing spokesman for the National Federation of Builders, said: "I am very aware of the practice among housebuilders who are unwilling to accept losses to rent properties until investors or private buyers return to the market. In some situations housebuilders are lowering their prices in order to sell, but many who can't afford to do that are renting and waiting for the upturn."
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