The housing market received another blow as new figures show mortgage approvals nosedived during the past year.
But evidence is emerging in the Midlands that the market is being lifted by some lenders reducing rates on fixed-term deals, an expert said.
Bank of England data showed just 36,000 new home loans were arranged during June – the lowest level of mortgage lending since the series began in April 1993.
The number was down 68 per cent on June last year’s figures, and represented a drop of 12 per cent compared with the previous month.
The ongoing squeeze on lending hit mortgage approvals across the board – remortgaging deals were down to 84,000, from 90,000 during the previous month and buy-to-let and equity release approvals were also down.
Hand-in-hand with the drop-off in the number of approvals, the amount of money lent during the month also plummeted.
Net lending, which strips out redemptions and repayments, fell to a near eight-year low of £3.1 billion - 69 per cent less than in June 2007.
The Bank’s dismal data, which was below economists’ expectations, reflects a struggling UK housing market where recent growth has been stunted by the dearth of mortgages.
A Government-commissioned report on mortgage financing warned the market would not return to normal for another two to three years.
The review, led by the former head of the Halifax Bank of Scotland, Sir James Crosby, said there was no quick fix to ease the log-jam in home loan funding and stopped short of providing any firm solutions to the problems.
But Sir James mooted the idea of further temporary support from the Government to help stimulate the mortgage-backed securities market.
Harvey Williams, West Midlands regional spokesman for RICS (Royal Institution of Chartered Surveyors) welcomed plans to revive mortgage lending.
Mr Williams said any assistance in easing the log-jam would help get the residential property market moving in the West Midlands.
He said: “The Bank of England’s figures tell us that mortgage approvals dipped in June to their lowest level since records began 15 years ago.
“Of course, those figures do not make pleasant reading but in the last two to three weeks there has already been some movement in the availability of mortgages, with certain lenders reducing rates on their fixed term deals.
“The evidence we have both anecdotally and from information gathered from chartered surveyor estate agents in the region is that this has already had some effect on footfall in their offices.
“While the increase in footfall has not been dramatic, it certainly suggests that the difficulties in getting mortgages is the biggest factor in the low number of property transactions.
“We would welcome with glee any further assistance from Government in improving the availability of mortgages because there is definite pent up demand from potential buyers who are simply having to hold-off purchasing a property until they can gain finance.
“But what we believe we will see is a rise in house prices again as soon as the liquidity in the markets improves further,” he said.