Mortgage approvals for purchases fell to their lowest level since May 2009, data from e.surv Chartered Surveyors’ mortgage monitor shows.
A total of 46,507 were approved, which was down 18% compared to October 2009, and down 2% compared to September 2010.
But remortgage volumes are 7.7% higher than a year ago but continue to remain close to historic lows.
The average LTV fell to just 56.8%, the lowest level since March this year.
The fall in the market average LTV was both due to sharp falls in LTVs for low value homes and a shift in the mix of approvals to higher value homes.
For example, homes in the £126,000-£250,000 price bracket , the average UK home, saw LTVs fall 0.5% in the month to 57.4% indicating tighter borrowing, while those valued between £751,000 and £1m actually saw lending conditions loosen.
Their LTVs rose by 1.6% to 44.4% while the volume of mortgages offered to homes valued below £500,000 fell 8.5% month on month.
Richard Sexton, business development director of e.surv, says: “The fall in approvals reflects both reduced demand for mortgages and tighter lending criteria from banks and building societies nervous about the outlook for the housing market.
“The squeeze on LTVs is consistent with nervousness among borrowers and lenders, too. It is at the bottom of the housing ladder where these trends are most apparent. Richer borrowers seem much less worried. For them, mortgage volumes are up and lending is getting more generous, mainly because their equity cushion tends to be so much larger.
“The remortgage market is still moribund on a historic comparison. The increase on a year ago reflects the fact that some borrowers are more nervous about the outlook for interest rates, but it is unlikely rates will rise in the short term.”