Mortgage approvals hit record low

Just 17,773 loans were approved for people buying a home during November, 14% fewer than in October and 60.7% less than in November last year, the British Bankers' Association said.

There was also a steep drop in the number of people remortgaging during the month, with just 29,798 loans for people switching to a better deal in the pipeline, down from 52,452 the previous month.

The figure, which was the lowest for eight years, was also less than half the level for November last year.

The number of approvals for people releasing equity from their home or taking out a mortgage on a buy-to-let property also continued to fall during November to 22,295, 44% less than in the same month of 2007.

David Dooks, BBA director of statistics, said: "The 1.5% November reduction in Bank rate caused lenders to reassess product ranges and borrowers to reconsider future borrowing costs, so consequently there was another drop in market activity.

"Volumes of mortgage approvals reached new lows and, with house prices still falling, the encouragement of lower costs had not filtered through by the month-end, largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances."

Mortgage lending continued to fall during the month, with net lending, which strips out redemptions and repayments, reaching just 2.9 billion, a third less than in November last year.

Total advances of £11.07 billion were at their lowest level since January 2002.

The figures are unsurprising given the ongoing slump in the housing market, while the tougher lending criteria being adopted by lenders is leading to many people remaining on the standard variable rate when they come to the end of a mortgage deal, rather than remortgaging to a new one.