U.K. mortgage approvals dropped to the lowest level since at least 1999 in November, house prices fell by the most in a quarter-century last year, and banks predict more curbs on lending as the recession deepens, Bloomberg reported.
Lenders granted 27,000 loans for house purchase, down from 31,000 in October, and banks said in a survey that they plan to restrict all lending further, the Bank of England said today in London. British house prices dropped an annual 18.9 percent in December, HBOS Plc, the country's biggest mortgage lender, said in a separate report.
Prime Minister Gordon Brown said last week he's planning new measures to bolster the economy as it succumbs to the first recession since 1991. Nationwide Building Society said today it won't pass on further reductions in the central bank's benchmark interest rate, which economists predict will fall to the lowest ever next week as the lending freeze persists.
"The credit conditions survey intensifies pressure on the Bank of England to slash interest rates further," said Howard Archer, chief European economist at IHS Global Insight in London. "It is far from inconceivable that interest rates could come all the way down to zero."
The yield on two-year gilts fell to the lowest on record after today's report. The two-year yield dropped as low as 0.95 percent, the least since 1992 when Bloomberg began collecting data.
