30/07/2012 09:11 BST | Updated 30/07/2012 11:05 BST

Mortgage Approvals Slump To 18 Month Low Causing Misery For First Time Buyers

Banks are closing the doors on more and more first time buyers, with mortgage approvals at a 18 month low, figures revealed on Monday.

The Bank of England revealed more housing market misery for those trying to grab the first rung of the housing ladder.

The number of approvals for house purchases in June was 44,192, down from a 25-month high of 50,544 in May and falling 10 % year-on-year, the Bank said.

The number of mortgage approvals are falling 10 % year-on-year, the Bank of England said

Repayments on secured loans were ahead of new lending for the first time since June 2011, leading to the smallest rise in total lending to individuals - £300 million - in nearly two years.

The number of approvals for re-mortgaging also fell back in June, to 24,117 loans worth £3.3 billion, down from 28,567 the previous month.

Earlier this month, the Bank of England launched an £80bn "funding for lending" scheme to boost bank lending to first time buyers and small businesses, which will go into effect on 1 August.

These cheap loans to banks and building societies by the central bank are intended to offset the effects of higher costs faced by financial institutions in wholesale money markets.

But Blerina Urici, economist at Barclays Economic Research, said the new measures would only have a limited impact and would "depend on the take-up by lending institutions."

Howard Archer, chief UK economist at IHS Global Insight, said the mortgage approval slump meant "underlying housing market activity is limited.

"Housing market activity is persistently low compared to long-term norms and while it may eventually be lifted by more mortgages being granted at decent interest rates under the 'Funding for Lending Scheme', this is unlikely to be a major factor in the near term at least."