There was fresh evidence today that the housing market is running out of steam. The number of mortgages approved for house purchase fell to a three-year low in November, while property price growth slowed down in every part of the country in the final quarter of 2007.

The Bank of England said that in November just 83,000 new home loans were approved - a fall from the 89,000 new mortgages granted in October and the lowest level since January 2005. The level of mortgage approvals has now fallen for five months in a row.

The latest figures provide confirmation that the credit crunch is starting to hit homeowners. Yesterday the Bank gave warning that they are likely to face higher mortgage costs and find home loans harder to obtain. Today the Bank added that the level of mortgages “reduced materially” in the last quarter of 2007 as banks and building societies tightened their lending criteria and became more wary of borrowers with poor credit histories.

Meanwhile Nationwide, Britain’s biggest building society, reported a further slowdown in house prices. In the final quarter of 2007 UK house prices rose by just 1 per cent, while the annual rate of growth slowed to 6.9 per cent from 9.3 per cent in the third quarter.

However even these figures do not tell the full story of the slowdown. Last week Nationwide reported that house prices actually fell by 0.5 per cent in December while Halifax, Britain’s biggest mortgage lender, has recorded a fall in property values in each of the three months to November.

Howard Archer, chief UK and European economist at Global Insight, which specialises in economic and financial analysis, said: The weak mortgage data for November provides yet further evidence that housing market activity is now slowing markedly in the face of stretched affordability as well as tightening lending practices resulting from the credit crunch.

“This evidence that the housing marrket is slowing markedly maintains pressure for another interest rate cut sooner rather than later.”

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