The number of new mortgage approvals during the 12 months to May plunged by 64 per cent to a record low, as the slump in the UK housing market shows no signs of abating.

Monthly figures released by the Bank of England today revealed that 42,000 home loans were approved in May, signalling a 28 per cent fall on the previous month and the worst data since the Bank's record began in 1993.

At the same time, the value of mortgage approvals nearly halved from £4.59 billion in May last year to £2.34 billion last month. May's mortgage approvals also fell compared April when they reached, according tothe Building Societies Asssociation (BSA)

Last week, Mervyn King, the Bank of England Governor, warned that activity in the UK housing market would remain weak and reiterated his forecast that inflation, currently at 3.3 per cent, could rise above 4 per cent by the end of the year.

If inflation continues to rise the Bank of England could raise the interest rate - a move that was discussed during June's Monetary Policy Committee meeting - which could in turn cause more pain for mortgage borrowers hoping to secure a good deal.

Adrian Coles, director general at the BSA, said: “It is important not to read too much into one month’s very low figures.

"However, the figures do reflect the considerable adjustment in housing market activity now being experienced. We expect activity to remain at low levels for some time.”

The Bank of England data also showed a tumble in mortgage approvals for homeowners who were trying to remortgage, falling from 100,000 in April to 90,000 in May.

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