The number of mortgages approved for house purchase fell for the sixth month in a row during October as buyers continued to stay away from the property market.
Only 47,185 loans were approved for people buying a property during the month, the lowest level since February, according to the Bank of England.
The subdued level of transactions, which is well below the 70,000 to 80,000 approvals a month which are considered to be consistent with a stable market, will continue to put downward pressure on house prices.
The figures come as property intelligence group Hometrack said house prices fell for the fifth consecutive month during November as the number of people looking to buy a property dropped at its fastest pace for nearly two years.
Activity in the housing market has fallen sharply in recent months as potential buyers wait until the outlook for both house prices and the wider economy is clearer, while those who want to go ahead with a purchase are continuing to struggle to raise the mortgage finance they need.
The shortage of buyers, combined with sellers continuing to put their properties on to the market, has triggered a fresh round of house price falls.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The Bank of England mortgage approvals data shows that housing market activity remains marooned in the doldrums, which seems highly likely to maintain downward pressure on prices. The data reinforces our belief that house prices will trend down to lose around 10% from their peak 2010 levels by the end of 2011.”
Vicky Redwood, senior UK economist at Capital Economics, said: “October’s UK household borrowing figures provide yet further evidence of the troubles in the housing market. With housing market activity this weak, we suspect that the recent house price falls have much further to go.”
There was a pick-up in net lending, which strips out redemptions and repayments, during October, with this rising to £1.25 billion, up from £246 million in September, although it was still below August’s figure and well down on the long-term average.
There was also a slight increase in the number of people remortgaging to a new deal during the month, at 29,275. Unsecured borrowing rose by £287 million during October, the biggest monthly jump since May, but only a fraction of lending of more than £2 billion a month regularly seen during the earlier part of the decade.