Mortgage approvals fell to new low in April

There was little sign of an end to the pain in the property market yesterday as the number of new mortgages approved for house purchase slumped in April to a record low, beating even March's record-breakingly poor performance.

The Bank of England reported that the number of new mortgages being approved for people buying a home was just 58,000, the worst monthly figure since the Bank began collating the data 15 years ago, and only about half the recent peak of 115,000 witnessed in May last year.

Observers had expected a small rebound after the severe crisis the credit markets experienced in March, when Bear Stearns had to be rescued by the US Federal Reserve.

The evidence points to yet more bad news. Alan Clarke, of BNP Paribas, said: "Given the usual lead over house price inflation of nine months or so, the series is pointing to continued falls in house prices for at least another year."

Last month, the Royal Institution of Chartered Surveyors said confidence had reached a 30-year low. Arrears and repossession figures are on a sharply rising trend, as seen in the latest announcements from Bradford & Bingley.

The Bank of England also said that mortgage lending retreated to £6.4bn in April, the lowest level since November 2004, markedly below the £7.5bn monthly average for the previous six months.

Consumer credit growth remains relatively strong, partly due to households having to turn to more expensive sources of finance.

The data suggests that the credit crunch is far from over, and mortgages remain hard to come by.

Moneyfacts, a financial comparison website, says that the number of mortgage products on the market has fallen to a quarter of where it was a year ago. Prices, though falling, are high by historic standards, and are proving a challenge for first-time buyers.

Headlines about falling house prices are also perhaps creating their own self-fulfilling downward momentum, as buyers wait for further falls to materialise before putting in an offer.