Total of home loans halves to a new low

Mortgage approvals from banks and building societies more than halved in January from a year before.

Just 23,400 loans were approved, a record low and down 52% on the same month last year and 28% on December.

Michael Coogan, director general of the Council for Mortgage Lenders, said recent moves by the Government to make nationalised banks lend more to homebuyers "cannot fill the gap overnight although we hope to see more funds flowing into mortgage activity later in the year".

But he also cautioned: "On top of the action to plug the funding gap and stabilise financial markets, we need to see a sustained revival of consumer demand.

"Consumer confidence and lender appetite will remain muted in the face of rising unemployment and falling house prices."

The reluctance of banks and building societies to lend money to people who have not saved up sizeable deposits is highlighted by the fact that the average loan to value was 89% in January 2008, whereas this year it has dropped to 76%.