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House prices continue to drop

Figures from the Land Registry show house prices fell 2% in February, a 16.5% fall year-on-year.

The average house price in February was £153,862.

Mark Blackwell, sales director at property and mortgage outsourcing specialist Xit2, says: “As long as house prices continue to fall, lenders will remain extremely cautious on LTVs – at the moment, the future of property values is anyone’s guess.

“This is bad news for borrowers who are struggling to come up with the cash for a 30% deposit.

“But more important for the mortgage industry is that it continues to put pressure on the volume of mortgage approvals coming through the system.

“The start of 2009 shows a worrying trend beginning. In January 95% of all remortgages were done by BBA members, up from around 75% in H2 2008.

“The reality behind these numbers – apart from the Nationwide and a small number of others, building societies and smaller lenders are showing no appetite to lend at all. All pressure is now on the main banks to circulate money and they’re not coping.”

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