U.K. mortgage approvals fell to a 16-month low in August as the housing market weakened, a report by the British Bankers’ Association showed.
Home loans granted by lenders to buy properties dropped 7.2 percent from July to 31,767, the London-based group said in an e-mailed statement today. The reading is down 22 percent from a year earlier.
Property values may fall further after the small size of declines caused by the financial crisis surprised people, Bank of England Chief Economist Spencer Dale said yesterday. The housing market is showing signs of faltering as Britain braces for the biggest public-spending squeeze since World War II and banks restrict access to credit.
“Demand for mortgages continues to be weak despite more properties reportedly coming on to the market,” David Dooks, statistics director at the BBA, said in the statement. “Even with stable or falling house prices, the current economic climate makes it unlikely that demand will pick up in the near future.”
The value of home loans granted in August dropped 7.2 percent to 4.7 billion pounds ($7.4 billion), a 15-month low, the BBA said.