Clouds darken as new loans and property sales plummet

More evidence, as if it were needed, has emerged of the scale of the slowdown in the UK housing and mortgage market.

The Bank of England said the number of new mortgages approved for house purchases in March fell to 64,000, down from 72,000 in February. This was the lowest level since January 1999, and was down 44 per cent on the figure for the same month last year.

The news followed hot on the heels of a statement from the British Bankers' Association (BBA), reporting a fall in new mortgages approved – down 46 per cent on the same month in 2007, and the lowest monthly figure since September 1997.

Overall, there can now be little doubt that the UK housing market is in the doldrums and that prices are falling in many parts of the country. The Land Registry announced on Monday that the number of properties being sold was 26 per cent down year-on-year. In the £150,000-to-£200,000 price bracket, usually dominated by first-time buyers, the slide in sales was even more dramatic – down 44 per cent year-on- year, according to the Land Registry.

Experts believe this reflects the difficulties experienced by first-time buyers at a time when lenders are raising mortgage rates and tightening their criteria for new applicants in reaction to the credit crunch.