The number of mortgages approved in the U.K. in July 2008 fell by 71% year over year to 33,000 loans from 114,000 in July 2007, according to the Bank of England.
The approvals figure is a record low and is 6% down versus the revised June 2008 approval figures, which reached 35,000. The cumulative fall for the January to July period was down by 54.8% compared to the same period in 2007.
Royal Bank of Scotland analysts said that the slow mortgage market means that prepayment speeds in amortizing mortgage product will slow with a reduction in origination.
Several lenders have cut lending rates over the last several weeks, but these will likely have a minimal impact, given far more restrictive lending conditions in the markets than even a year ago, analysts said.