According to Reuters Mortgage approvals fell for the seventh month running in December to the lowest since current records began in 1999, official data shows, the strongest sign yet that the housing market is slowing sharply.

The Bank of England said mortgage approvals for house purchases fell to 73,000 last month from a downwardly revised 81,000 in November, well below analysts’ expectations for a reading of 79,000.

Consumer credit also weakened markedly, rising by 557 million pounds, the smallest increase since April 2007 and half the amount forecast.

The weaker than expected figures add to a growing body of evidence that the housing market is cooling fast and the credit crunch is feeding through to the real economy.

“Striking evidence that housing market activity is now being substantially undermined by both stretched affordability and tightening lending practices,” said Howard Archer, an economist at Global Insight.

“This adds to the already intense pressure on the BoE to cut interest rates next week, and to enact further reductions thereafter.”

The BoE is widely expected to cut interest rates from the current 5.5 percent at its February meeting, with markets pricing in about another three cuts before the end of the year.

Total net lending showed the weakest rise in almost two years, up 9.1 billion pounds in December…

View Story at Reuters

If you enjoyed this post, make sure you subscribe to my RSS feed!