New mortgage approval rates in the UK have dropped to a record low, with approved new home loan numbers down 64 per cent in the space of a year.
The British Bankers’ Association (BBA) said through August mortgage lending went up by only £2.1 billion, which is less than half the average rise over the last six months.
Previous confusion over the status of stamp duty tax was again blamed for the dramatic fall in approvals.
BBA statistics director David Dooks said: “Falling property prices, economic pressures on households, tighter lending criteria and anticipation of the government’s announcement on stamp duty all suppressed or delayed demand in August and will continue having an impact in the months ahead.”
Mortgage interest rates also look set to climb for property investors and regular buyers after experts warned banks had again increased the rates put on loans they make to each other.
Website Fool.co.uk said the London Interbank Offered Rate (LIBOR) had recently gone down from six per cent to 5.7 per cent but turmoil in financial markets had seen it creep up to six per cent again.
David Kuo, head of personal finance at the site, said many attractive mortgage products could be withdrawn, and urged anyone about to move off a fixed-rate deal to urgently apply for a new one.
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