Mortgage approvals down by 40%

The number of mortgage approvals for house purchase has fallen by nearly 40 per cent during the past year, figures have shown.

The Bank of England said 73,000 home loans were approved for people moving house during February, compared with 120,000 in the same month of 2007.

The total was the second lowest since July 1995, after mortgage approvals dipped to 72,000 in December.

Continued weakness in mortgage approvals is likely to reinforce expectations that the once red-hot housing market will cool swiftly this year, with some analysts pencilling in a five per cent fall in house prices.

James Knightley, an economist at ING, said: "The situation is going to get worse over the next few months. Pressure is growing on the Bank of England to cut interest rates next week."

The Bank of England is widely expected to cut interest rates by 0.25 per cent points to 5 per cent either this month or in May to help shore up the economy as the credit crunch starts to affect households.

Meanwhile, consumer credit rose by the biggest amount in more than five years in February.

Bank of England figures showed consumer credit rising by £2.353 billion in February, up from a £879 million increase in January and well above forecasts for a rise of £900 million.

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