The malaise in the housing market worsened in July as the number of mortgages approved for house purchase fell by 71 per cent to a record low of 33,000 home loans.

The number of mortgage approvals fell from 114,000 in July last year, and today's figure is the lowest recorded by the Bank of England since records begin in 1993.

The number of remortgages also dropped sharply in July to 69,000, down from 80,000 in June and the lowest figure since November 2001, according to the Bank of England.

The lack of buyers in the housing market, deterred by demands for hefty deposits and higher mortgage rates, is dragging down prices as sellers are forced to cut their prices to secure a sale.

Figures out last week from Nationwide showed that prices fell by more than 10 per cent in the 12 months to August, and some economists predict that property values could decline by 35 per cent from the market peak in August last year.

Soaring energy and fuel prices are piling more misery on homeowners, with recent figures showing that the amount of money people can afford to save plummeted to a record low earlier this year.

The savings ratio fell to 1.1 per cent between January and Marcy, the lowest rate since 1959.

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