The home loans drought has deepened with mortgage borrowing activity dropping to another record low in November and banks further restricting access to loans over the past three months.

The Bank of England reported this morning that the number of new home loans agreed in November fell to the lowest level since records began a decade ago.

Just 27,000 mortgages for house purchase were approved by banks and building societies, down from a revised 31,000 in October, the Bank’s figures revealed. The worse-than-expected total was the lowest since the Bank’s data began in 1999.

The value of mortgage loans made in the four weeks rose by £740 million, but the increase was far short of levels a year earlier.

The news came as the Bank’s latest quarterly credit conditions survey of the state of the lending markets showed that the credit crunch continues to grow more severe.

A net 31.1 per cent of lenders questioned by the Bank said that they had cut the availability of secured loans — mainly mortgages — to prospective borrowers over the three months to mid-December, despite steady demand.

This was almost twice the net number of lenders who had predicted three months ago that they would further curb access to mortgages.

Lenders are also expecting to further restrict their secured lending to households in the first quarter of the new year. A net 21.2 per cent said they expected to further rein in availability of loans in the current quarter.

The banks blamed expectations of further falls in house prices and mounting fears over economic propsects for the even more severe credit squeeze.

The Bank of England’s results also showed that access to unsecured consumer credit also became harder during the past three months, while corporate credit availability also tightened. Business leaders have led vocal demands for the Treasury to take action to compel banks to ease their access to ready finance at a reasonable cost.

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