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New mortgages approved for house purchase rose to 33,000 in September, a 1,000 increase on the historic low of just 32,000 achieved in August, according to figures released by the Bank of England today.

The marginal increase, the first month-on-month rise since June 2007, still leaves the number at record low levels and over two thirds down from the levels being achieved just a year ago. Figures for remortgages, also released today, showed a small improvement with the number up on August.

Whilst net mortgage lending rose £2.167 billion in September, the August number was revised down and showed a fall of £691 million in August – in other words mortgagors paid off more than they borrowed.

The contraction of mortgage credit in August continues to confirm that a Secular Bear in both Homeownership and real House Prices is under way, despite the efforts by money-pumping Central Banks to inflate away the problem by expanding the money supply. Broad money grew by 12.4% in the year to September, up from 11.5% in August, the fastest rate since January.

Eyes on Next Week

Hopes for a minimum 50 basis point cut by the Monetary Policy Committee at next week’s two-day meeting have already been reflected in currencies and the action of stockmarkets, the latter appearing to have started their counter-trend rally amidst the current bear market.

There are hopes that with interbank lending finally easing, the decline in rates between banks continued today with the 3-month dollar rate shedding another 5bp to 3.42%, any cut of the base rate by the MPC will be reflected in the rates paid by borrowers . . . be those borrowers mortgagors or other banks.

It is also likely that politicians, having used taxpayers money to nationalise banks, will look to apply pressure in the run up to Christmas. Even as recession engulfs the entire economy, and RPI-adjusted GDP continues to contract at the fastest rate for over 30 years, it would not be inconceivable for the banks new masters to urge them to advance credit in a hope to get the overindebted consumer indebting again so that retail sales look good in the New Year and tax revenues can be bolstered.

The range of different mortgages available through high street lenders has plummeted to just 3,281, a three-quarters drop from the July 2007 peak of 13,000, according to Moneyfacts.co.uk.

Analysis of house price data from Nationwide Building Society shows that RPI-adjusted prices also peaked in July 2007, though the peak in nominal prices was October 2007.

The two are not disconnected.

The absence of bank-to-bank lending, the inability to securitise mortgages and the spike in interbank interest rates has both reduced mortgage choice by 75pc and resulted in numerous lenders withdrawing from the marketplace, some even going bankrupt. Those lenders left standing are only willing to lend to people with good credit and a big deposit.

Without cheap and easy credit chasing high-risk borrowers, property prices could do only one thing … Collapse. Figures from both Nationwide and Halifax show a year-on-year decline of more than 12pc. Meanwhile, the Bank of England reports that new house purchase mortgages plunged to a historic low of just 32,000 in August.

Whilst both credit and criteria remain tight the housing market has little hope of recovering. In fact, stabilisation is the best that can be hoped for and a U-shaped recession would now be considered a lucky escape compared to the L-shaped depression which is threatening to make an entrance.

This means, for those with cash or impeccable credit, cheap properties will continue to be available for the foreseeable future and, if you can find them, there are plenty of bargains still to be had.