Economic news worsens

FTSE holds up despite news the UK economy has contracted further and mortgage levels are some 60% down on last year Editors 23 December, 2008 | 2:47PM

The FTSE has held up well through much of today despite the increasingly gloomy economic statistics being released which show the UK economy contracting and mortgage approval rates falling to record lows. The FTSE 100 rose just over 1% as of 2:30pm to a level of 4294.59. Although volumes have been thin as the markets head into a Christmas breather, the leading stocks in trade on the FTSE All-Share today have been internet company Yell, Salamander Energy and building supplier Travis Perkins.

Among the economic news released today were figures from the British Bankers Association showing 17,773 mortgage loans were approved for homebuyers in November, down from 20,767 last month and some 60% down over November 2007. According to the association this is the lowest level since it began records in 1997.

The 1.5% reduction in UK base rates last month did little to boost the mortgage market as lenders re-assessed their product ranges and the number of lenders in the market is continuing to shrink. BBA statistics director David Dooks said the encouragement of lower costs did not filter through largely because people remain concerned about the impacts of the rapidly slowing economy on their personal finances.

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