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Mortgage Drought cuts number of homes changing hands to lowest in four decades

RICS blames the near-freeze in housing transactions last month on the scarcity of home loans, with would-be buyers struggling to secure mortgages, and forced to pay significantly more for the loans than can be had.

The institution also sounds a warning that the market is being further undercut as confused signals from the Government over the possibility of future stamp duty concessions from the Chancellor deter potential buyers.

At the same time, the survey also finds that numbers of new buyer inquiries rose last month, while expectations of future numbers of sales among surveyors also climbed.

There was also some relief for those struggling to secure a competitively priced mortgage as the Bank’s figures showed that the average interest rate on a two-year fixed-rate home loan, based on borrowing 75pc pf a property’s value, dropped to 6.36pc last month, from 6.6pc in June. Meanwhile, the average interest rate last month on a five-year fixed-rate loan, for 95pc of a property’s value, edged upwards, rising to 7.14pc to reach its highest since early 2000, the Bank’s figures showed.