Mortgage approvals lowest in two years

As the credit crunch results in a tightening of lending conditions in all loan sectors, mortgage approvals have dipped to their lowest level in two years.

The number of approvals which went through in September was 102,000, which is the lowest since July 2005, according to figures from the Bank of England.

House price rises are expected to be affected by this, reports Reuters.

The Council of Mortgage Lenders expects prices to rise by just one per cent next year, following rises of seven per cent during 2007. But as yet this trend is not expected to have an effect on interest rates.

It is though, however, that house price increases will begin to subside as fewer can afford to purchase those currently on the market.

Alan Clarke, an economist at BNP Parabis, said: "We think there will be plenty more downside in the coming months which will lead to a sharp fall in house price inflation further down the road."