UK Mortgage Approvals down by a third.

U.K. mortgage approvals fell by a third in February compared to last year figures due to a combination of the current credit crisis which has mean increased credit costs which have deterred buyers.

Furthermore banks and mortgage lenders have had to stiffen their regulations especially due to the consideration of the availability of credit and the huge write-downs and losses that have been incurred.

A report by the British Bankers’ Association showed that banks have granted 43,870 loans for house purchase, which is down 33 percent although the figures only represent the UK’s biggest banks and lenders.

New mortgages tell the story of a nervous property market, although approvals for re-mortgaging rose 5.5 percent from a year earlier to 72,193 revealing how some households are dealing with the credit crunch.

Today’s figures are a strong indication that Britain’s housing slump may continue to spiral as fewer buyers can afford homes, due to increased deposits needed as the day of the 125 percent or even the 100 percent loan to value mortgage has all but disappeared, with an average requirement of a 10-15 percent deposit racing most first time buyers.

The Bank of England Governor Mervyn King said yesterday there had been “a distinct tightening of credit conditions” even though he central bank has reduced its benchmark rate twice since December, to 5.25 percent this has not necessarily been reflected to the consumers.

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