Home loan approvals fell by 68.4 per cent to a record low in the year to June, according to figures from the Bank of England, signalling further falls in house prices in the coming months.

The Bank said mortgage approvals fell from 41,000 in May to 36,000 in June, below analysts' expectations of 36,000.

The rate of mortgage approvals was the lowest since records began in 1993 and was down a staggering 68.4 per cent year-on-year from 114,000 in June last year.

Mortgage lending in June was also weaker than expected, rising by just £3.1 billion, its smallest increase since October 2000.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyers, said: "The latest numbers from the Bank of England demonstrate, in the clearest possible way, the consequences of the credit crunch for the residential property market.

He added: "Against this backdrop, it is not surprising that the high street appears under increasing pressure with consumers scaling back purchases of a range of household goods.

"Unless the authorities take steps to restart the mortgage market, the likelihood is that there will be more bad news in store for the housing market and the retail sector during the latter part of the year."

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