According to data obtained from the British Bankers’ Association revealed that new home loans approved by the banks during November was down by 44 percent compared to that in the corresponding period last year, while the figure for October 2007 is even more pathetic and an all time low.

According to official figures released by the British Bankers’ Association, a total of 44,811 new home loans were approved by the banks, which spent less than ₤ 4.3 bn during November 2007.

As this is being attributed to higher credit rates and increase in house prices in Britain during the last one year coupled with a credit crunch, market observers feel that soon there will be a demand for yet another interest rate cut in 2008. It was only early this month that the Bank of England had brought down the interest rates on home loans to 5.5 percent.

According to British Bankers’ Association Statistics Director David Dooks, the mortgage market in the country is definitely slowing down as strict household finances as well as vagueness regarding the financial markets were driving the consumer pattern.

He attributed this partly to lower demand and partly to less supply. On the other hand, Global Insight’s chief economist Howard Archer also felt that the market slow down was primarily owing to the ‘stretched affordability’ of the consumers and a strict streamlining of the credit policies of the banks.

All said and done, many are of the opinion that higher interest rates by the banks have made the consumers reluctant to use their credit cards to finance their spending or withdrawing money to purchase property. While the markets expect another interest rate cut by the Bank of England, the circumstances have led the Pound to fall in comparison to the Euro again! 

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