Lending Falls

Mortgage lending from building societies slumped again last month.

Data from the Building Societies Association shows that net lending was down from £1,262 million in May to £125 million in June.

The statistics follow hot on the heels of Bank of England mortgage approval figures for May, when the number of new home loans fell to just 42,000 - a collapse of 63.8% since the same month a year ago, when there were 116,000 loan approvals.

The number of new home loans has now hit an all-time low.

Last year, there were just under one million housing transactions - well under the normal 1.4 million that is the long-term average. This year, it looks as though a new record low will be set as the credit crunch continues.

Meanwhile, the gloom continued with the latest Nationwide Building Society survey, which showed that house prices in June fell 7.3% from their peak in October, wiping an average of £13,500 off the average house price.

However, the rate at which house prices fell slowed; they tumbled 2.5% in May and 0.9% in June.

And there is more bad news from the bearish research consultancy Capital Economics, which warns that the UK economy is on the verge of a recession that could see up to a million jobs shed over the next 18 months.

Forecasting a severe recession next year, it predicts that average UK house prices will be 35% lower by the end of 2010.

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