Mortgages drop 10% in a month

The number of new mortgages approved for house purchase fell sharply last month to 64,000, the smallest number since January, the British Bankers' Association said yesterday.

That represents a drop of 10% from July and 22% since August last year, and is the latest sign of a rapidly slowing housing market.

The BBA reported last week that the value of net new loans for house purchase was £4.4bn, the lowest since June 2002.

"The slowing down of net mortgage lending in August looks set to continue in the next couple of months," said David Dooks, the BBA's director of statistics.

"A further weakening in the number of loans approved [for house purchase and equity withdrawal] in August indicates that households' appetite for secured lending is moderating."

Alan Castle, economist at Lehman Brothers, said the news from the BBA meant figures due tomorrow from the Bank of England would show a fall in mortgage approvals across the economy, not just from banks.

The housing market, which has seen prices more than double in recent years, has come to a juddering halt in the past couple of months after five interest rate rises.