UK mortgage approvals hit record low in June

LONDON, July 29 (Reuters) – Approvals for new home loans in Britain fell to a record low in June, Bank of England data showed on Tuesday, pointing to further sharp falls in house prices in the months ahead.

The Bank said mortgage approvals fell to 36,000 last month from a downwardly revised 41,000 in May. That was less than a third of the level this time last year as lenders have been tightening credit criteria.

Analysts had forecast a reading of 37,000.

Mortgage lending in June was also weaker than expected, rising by just 3.102 billion pounds, its smallest rise since October 2000.

After years of double-digit growth, British house prices have been coming down fast this year as a global credit crunch has forced banks to curb lending and insist on bigger deposits before making new loans.

House prices have already fallen around 8 percent from their peak last summer and some analysts are predicting falls of as much as 30 percent by the end of 2009, especially as the Bank of England looks unlikely to cut interest rates any time soon because of rising inflation.

Consumer credit rose by a weaker than expected 872 million pounds in June, taking overall net lending up by less than 4 billion pounds last month, the weakest gain since February 1999.