UK house sales collapse as credit crunch drives down mortgage lending

The number of house sales were down 37% in May compared with the same month a year earlier, dragged down by a slump in mortgage lending of 56% over the same period.

The latest figures represent a dip in house sales of 13% since April, with mortgage lending down by 20% in that single month.

Housing market

Stamp duty registration figures from HM Revenue & Customs showed a slump from 115,000 sales in April to 100,000 in May, the biggest monthly fall since December 2006. RICS data has shown housing transactions at the lowest level since records began in 1978.

Falling sales are being linked to a predicted fall in house prices of perhaps 30%, and come in the wake of tighter mortgage lending caused by the credit crunch.

The latest figures from the British Bankers Association (BBA) show mortgage lending for house purchase at its lowest recorded level.

New mortgage approvals to homebuyers by BBA members, which account for two-thirds of total UK mortgage lending, fell 20% in May to just 28,000.