The figures show that total net mortgage lending in October this year amounted to £459million, compared to £1.49billion in September. The mortgage lending figures for October are the second lowest on record, the lowest being £176million in August this year.

The figures also show that year on year, mortgage lending in October 2008 is down 95 per cent compared to the £8billion lent in October 2007. Commenting, Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS), said:

“The continuing lack of activity in the housing market is clearly demonstrated by the latest mortgage approvals data from the Bank of England which remain at historically low levels.

“Interest rate cuts and falls in inter-bank lending have not yet encouraged activity to rise in the UK mortgage market. First time buyers and homeowners alike are still struggling to buy a property as banks are still requesting sizeable deposits, further stagnating the property market, this will continue unless banks begin to loosen up on lending conditions.”

As a result of mortgage lending remaining low, rumours are rife that the Bank of England will slash the Bank interest rate again on Thursday in an attempt to further stimulate the falling economy.

However, according to Which? banks are trying to hide behind inter-bank Libor lending rates which they say have not fallen in line with the last bank base rate cuts. When the Bank of England first cut the interest rate to 3 per cent, banks argued that it would take time for the Libor rate to fall.

But, Which? says that since November 5, Libor rates have in fact fallen. Commenting, Peter Vicary-Smith, chief executive at Which? said: “Banks have been benefitting from this Libor cut and to date, none of them has passed on the full cut.

“If the interest rate is cut again on December 4, it will be even more important for banks to cut their rates and give consumers the break they deserve.”

© Fair Investment Company Ltd