House Prices ‘a Long Way To Fall’

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UK Mortgage approvals fell sharply again in October, the Bank of England reported yesterday, confirming fears that house sales and prices have a lot further to fall.

Bank of England figures show that just 32,000 mortgages were approved, 1,000 fewer than in the previous month.

Howard Archer, chief UK economist at IHS Global Insight, warned: ‘Housing market activity is exceptionally low compared to long-term norms.

‘An extremely weak set of Bank of England mortgage approvals and lending data suggest that house prices still have a long way to fall.’

The UK housing market has already seen prices fall by between ten per cent and 15 per cent in the past year, with sales down by more than half.

Approvals have slumped by 74 per cent in the past year, under the impact of the worldwide financial crisis, with banks and building societies rationing their mortgage lending.

In June 2007 approvals stood at 115,000, and by October last year had already fallen to 88,000 that month.

For the past four months they have hovered between 32,000 and 33,000 each month.

The total amount of mortgages loaned during October was almost 70 per cent down from September to £459m, the second lowest figure on record and only six per cent of the level just one year ago.

Lending by building societies rose slightly, for the second month in a row, after shrinking during the summer months.

However, in the past year lenders have been forced to ration mortgages to those who can put down a large deposit.

Meanwhile, banks have been raising interest rates on their credit cards and other unsecured loans.

For the past three months the total amount of new lending to individuals has risen by just one per cent each month, the slowest monthly rate since the Bank of England started publishing its records in 1993.

l Banking group HSBC yesterday confirmed it is cutting 500 jobs across the UK.

The announcement comes after the bank said in September that it was cutting 1,100 jobs worldwide because of the continuing global financial turmoil.

Trade union Unite accused HSBC of ‘using the economic downturn as an excuse to make job losses’.

Unite joint general secretary, Derek Simpson, said the union would oppose any compulsory redundancies.

He added: ‘Unite is appalled that this news has been delivered so close to Christmas. The union sees no business rationale for these job losses.’