Mortgage approvals in the UK dropped to an eight-month low in October, reflecting the increasing slowdown in the property market.
The Bank of England said mortgage approvals to purchase homes reached 47,185, down from 47,369 approved loans in September.
According to the median of 17 predictions in a Bloomberg News survey, economists forecasted 47,000 home loan approvals, but this which is less than half the level seen in early 2007.
The recovery in the housing market is uncertain, as the UK government’s plans for the biggest spending cut since World War II weakens demand.
“The housing market is in poor shape,” said Alan Clarke, an economist at BNP Paribas. “Lending conditions aren’t getting that much easier and consumers are uncertain.”
Net mortgage lending reached £963 million (S$1.9 billion) in October, down from £174 million a month earlier, said the Bank of England. Gross home loans hit £11 billion, the lowest level in six months.
“Concerns over the economic outlook on the back of recent spending cuts together with widespread expectations that house prices are set for a period of retrenchment, are driving the continued weakness in demand,” said Richard Donnell, director of research at Hometrack. The group forecasted that prices will fall 2 percent next year.