Mortgage approvals in the UK fell to its lowest level in eight months, as the poor economic outlook hurt demand for property and banks tightened lending conditions.
According to the Bank of England (BoE), lenders approved 48,986 home loans, down from the revised figures of 57,899 in the previous month. Based on the average forecast of 21 economists surveyed by Bloomberg, mortgage approvals could decline to 57,200 from the initially reported 58,728.
Meanwhile, another report from BoE said lenders expect mortgage availability to fall slightly in the second quarter.
Mervyn King, Governor of the central bank, had earlier said that the financial crisis has yet to end and banks will continue to strengthen their balance sheets despite the debt crisis in Europe. Latest data from Nationwide Building Society shows that UK home prices slipped the most in two years during March and residential property may suffer more pressure as increasing unemployment affects consumer confidence.
“Households are still being heavily squeezed and inflation is running way ahead of wage growth,” said Victoria Cadman, an economist at London-based Investec Securities. “There’s no real impetus for them to turn around and up their demand for mortgages, so it’s difficult to see any step change coming through the next few months.”
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