Mortgage approvals slump to record low in Dec

Mortgage approvals for house purchase fell for a seventh consecutive month in December to the lowest since records began in 1999, Bank of England data showed on Wednesday.

The Bank said mortgage approvals fell to 73,000 last month from a downwardly revised 81,000 in November, well below analysts' expectations for a reading of 79,000.

Consumer credit also weakened sharply, rising by 557 million pounds, the smallest increase since April 2007 and half the amount forecast.

The weaker than expected figures add to a growing body of evidence that the housing market is cooling fast and that the credit crunch is feeding through to the real economy.

As such, the data is likely to cement expectations that the Bank will cut interest rates next week from the current 5.5 percent.

Total net lending showed the weakest rise in almost two years, up 9.1 billion pounds in December.

Within that, mortgage lending held up, posting a rise of 8.6 billion pounds. Analysts had expected a rise of 7.5 billion pounds.

However, mortgage lending tends to indicate how strong the housing market has been rather than how it will perform.

Mortgage approvals are used as a better gauge of the future health of the market.

The Council of Mortgage Lenders has warned that mortgage lending will fall dramatically this year unless credit market conditions ease.