Approvals for home loans fell to a record low in April, latest figures from the Bank of England show.

The worse-than-expected figures prompted predictions that the housing market will "fall sharply" over the next two years.

Mortgage approvals fell to 58,000 from 63,000 in March - 7,000 less than the 65,000 predicted by analysts.

The overall value of mortgages approved over the month was £23.8bn - below the average £26.1bn lent in the previous six months.

The mortgage approval figure is the lowest since comparable records began in 1999, and just over half of the level at which approvals were running a year ago. There were 107,000 home loans approved in April 2007.

The figures will fuel further speculation about the state of the British housing market. Last week, Nationwide building society's monthly survey of house prices revealed a decline at the fastest rate since records began.

Mortgage approvals over the three months to April were at 192,000, just above the record quarterly low of 191,000 seen during the last housing market crash in the final quarter of 1992.

The dramatic fall in mortgage approvals could mean problems for the wider economy, industry experts warned.

Simon Rubinsohn, chief economist for the Royal Institution of Chartered Surveyors, said: "The 58,000 mortgages approved in April is roughly half the total sanctioned in the same month a year ago.

"This highlights very clearly the real problem facing not just the property market but also the wider economy. A collapse in transactions of this magnitude has major implications both for consumer spending and a wide range of ancilliary industries."

Howard Archer, chief UK and European economist for Global Insight, said high house prices, low wage rises and the sharp decrease in available mortgages were behind the fall in mortgage lending.

"House buying is under severe pressure from the toxic combination of stretched affordability and tight lending conditions," he said. "Furthermore, potential house buyers now have to provide higher deposit levels, which is a major problem for first-time buyers."

He said the future for the housing market looked grave for the next two years: "Global Insight now forecasts house prices to fall by 10% in 2008 and 12% in 2009."

He added: "We see extended downward pressure on house prices coming from serious buyer affordability constraints, limited and often more expensive mortgages available due to ongoing tight lending conditions, a deteriorating economic outlook and reduced prospects for further interest rate cuts in the near term at least.

"The marked deterioration in sentiment over the housing market also heightens the risk that house prices will fall sharply over the next couple of years."

Guardian