/24-7PressRelease/ - LONDON, UK, April 09, 2008 - The efforts by the Bank of England to ease the credit situation in the money markets by pumping in more money on easy terms had a little desired effect. The figures from the British Bankers' Association show that these measures have done little to prevent the credit crunch affecting the real economy as the number of home loan approvals in the month of February fell down by an annual 33%.
The after effects of global credit crunch are feeding through to the economy. The lenders have tightened up their lending criteria and the money has become more expensive despite the lower official borrowing costs. The lenders and banking institutions are shying away from lending to each other amid the fears that credit situation might worsen even more in the time to come. The London inter banking rate is also floating around on the higher side for quite sometime.
Seema Shah, an economist at Capital Economics, said: "In view of the credit squeeze, the accompanying tightening in mortgage lending standards, as well as fears of further house price falls, the subdued level of mortgage demand in February should be no surprise." Shah was also of the view that even cuts in the interest rates may not have impact on the housing market because the mortgage rates were not falling in line with the base rates.
It is expected that the Bank of England may trim the interest rates by quarter of a percentage point in April or May, making the home loans and other secured loan variants a little cheaper in the market.
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