Painful economic correction looms as mortgage lending collapses

The risks of a painful correction in the economy are increasing, judging by economic data showing new mortgage lending has collapsed, consumer confidence near all-time lows, and lower productivity that will put pressure on businesses to cut jobs.

Property Week, 01.07.08

The Bank of England said yesterday that mortgage approvals for house purchase slid from 58,000 in April to 42,000 in May, much lower than analysts had expected and 64% down on a year earlier. First-time buyers have almost completely disappeared and the mortgage market is at a standstill as Britain endures its worst housing slump since the 1970s, official data suggested yesterday.

The figures confirm the speed at which conditions in the housing market have deteriorated. Mortgage approvals are one of the best guides to the likely course of house prices, as they reflect new funding entering the market - full article