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Bank sees approval slump continue

30 January, 2008

In addition, the twelve-month growth rate fell to 9.3 per cent, whilst the three-month annualised growth rate fell to 8.3 per cent.

However remortgaging figures held onto a degree of stability, growing to 97,000 since November - a trend which will surely continue as greater amounts of borrowers come to the end of their initial tie-in period in the months ahead.

Net credit card lending, loans and advances also rose, pushed by Christmas spending.

Ian Kernohan, economist at Royal London Asset Management, believes this proves that the housing slowdown is more pronounced than in 2005.

"This data bodes ill for the next set of retail sales data," he warned. "The fallout from the US housing crisis is spreading to the UK via a general squeeze on credit availability and the MPC will seek to offset some of this effect by cutting rates again next month."

The Royal Institute of Chartered Surveyors (RICS) added that the Bank's data supported its own findings: "The combination of reduced loan to value ratios and the more discriminating policy of lenders is clearly having an impact on the availability of finance for property purchases.

"There a few signs of immediate relief on this front and those attempting to get on the property ladder are likely to find the environment challenging for the foreseeable future."