New data from the British Bankers’ Association (BBA) has found that during May the number of mortgage approvals for new homes fell by 56.8% from May 2007.

The total number of approved loans for new homes in May fell to a record low of 27,968. As well as being 56.8% lower than May 2007, the figure was almost 20% down from April. The figures for approvals for new homes are often seen as a good indicator of housing demand. The continuing monthly fall is consistent with the effects of the credit crunch as recent evidence provided by the Royal Institution of Charted Surveyors (RICS) found that new buyer enquiries were ‘still well into negative territory’.

The BBA also collated the amount of remortgaging that was approved in May. This market appears to be performing better as the amount only fell by 10% from May 2007’s figure.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), told PIN: “The BBA figures present a gloomy picture of the market. IMLA recognises this but our own surveys have found that the market contraction is somewhat less. The BBA figures, especially the 56.8% fall in mortgages for new homes, reflect the banks’ rapid change in policy over the last year.”