The troubled UK mortgage sector continued to report more bad news. Last month, the Bank of England revealed only a depressing 42,000 mortgages were approved for home purchases. This is the lowest level since records began 15 years ago. The number of mortgage approvals is now 67% down on this time last year.
With a fall in mortgage approvals, it is no surprise that the weakening demand is leading to lower prices. The only glimmer of hope was the increase in savings that building societies have been able to attract. Higher levels of savings may help to finance more mortgages in the future. Although, it is worth noting, most banks in the past have relied on borrowing from other banks to fill their mortgage lending.
Some economists predict house price falls of 20-25% from their peak last July.
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[...] The main cause of falling prices is the slump in mortgage availability, mentioned recently. [...]
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