24th Dec 2008House prices to fall by 10% in 2009 as lenders remain cautious, surveyors warnSource: http://www.guardian.co.uk The warning came as figures from the British Bankers' Association showed the number of mortgages approved for purchases fell to a record low in November, despite the 1.5% cut in interest rates.  The Royal Institution of Chartered Surveyors (RICS) said there were signs that activity in the market was recovering, with enquiries from would-be buyers recovering to levels last seen in October 2006. However, it warned the key to turning those enquiries into sales would be the availability of funding, and called on the government to ensure creditworthy borrowers get access to loans.  RICS's chief economist Simon Rubinsohn said: "Lenders are likely to remain cautious in the near term in the absence of any 'guarantees' on mortgage-backed securities. This, coupled with an increasingly gloomy economic picture, suggests house prices will continue to decline in 2009."  The group also warned that the number of new homes being built was likely to keep shrinking next year. It said there were likely to have been only around 110,000 new housing developments started in 2008, a figure far lower than those recorded in the 1990s recession.  BBA figures published this week showed just 17,773 mortgages were approved for homebuyers in November, down from 20,767 in October and 61% below last year's figure of 44,315.  This is the lowest level of approvals since records began in 1997, and the continued lack of demand for homes is likely to drive down house prices further in coming months. The value of home loans approved for buyers was down by almost 70% year-on-year, at £2.1bn. It was not just a lack of numbers that pushed down the overall value of lending for house purchases - the average value of mortgages has also fallen sharply since last year as house prices have tumbled and lenders have restricted maximum loan sizes. In November, the average loan for a house purchase was £116,700 - a drop of almost £12,000 since October and well below the average of £159,600 last June, when the market was near its peak. There was also a steep drop in the number of borrowers remortgaging, customers who would usually remortgage at the end of a special offer rate may have been persuaded to stay on their lenders' standard variable rate (SVR) after the banks were pressed to pass on the base rate cut to existing borrowers. After the 1.5 percentage-point reduction in rates, many SVRs are now more competitive than the short-term discount and fixed rates on offer to new customers.  The BBA said the shock interest rate cut to 3% had prompted November's slowdown in mortgage activity. The BBA's statistics director, David Dooks, said the cut had "caused lenders to reassess product ranges and borrowers to reconsider future borrowing costs".