U.K. Mortgage Approvals Fall 39% on Tighter Lending

U.K. mortgage approvals fell in April as sliding home values and tighter loan terms dimmed the appeal of borrowing to buy property, a report by the British Bankers' Association showed, reported The Bloomberg.

Banks granted 38,704 loans for house purchase, down 39 percent from a year earlier, the London-based BBA, which represents the U.K.'s biggest banks, said today in a statement. The number is up 9 percent from March.

House prices are declining as fallout from the global credit squeeze prompts financial institutions to curtail lending. Banks raised the average cost of a mortgage with a 5 percent down payment to the highest in more than eight years last month, Bank of England data show.

``Pressures on household finances, stalling house prices and tighter lending criteria in response to lower liquidity are all constraining demand for house purchase,'' David Dooks, director of statistics at the BBA, said in the statement.

House prices fell 1.9 percent in May from a year earlier, the most since November 2005, Hometrack Ltd. said yesterday.

Approvals for refinancing of mortgages jumped 20 percent to 74,722 from a year earlier, the BBA said.

``There is an active remortgaging market as people switch lenders to obtain better deals,'' the BBA said.

Annual growth in credit card lending slowed to 4.9 percent in April and growth in personal loans and overdrafts declined to 3.6 percent, the BBA said.