Pound plummets on fears over mortgages and election

The pound tumbled today after gloomy figures on mortgage lending compounded worries about the impact of a potential hung parliament.

Polls showing the Conservative Party's lead dwindling heightened concerns that efforts to reduce the budget deficit could be stymied by deadlock at Westminster.

Sterling dived more than two cents against the dollar to $1.5021 and also hit a one-and-a-half-month low against the euro of 90.63p. The Bank of England said mortgage lending rose faster than expected in January, up £2 billion, but the number of approvals fell from 58,000 to 48,000.

Some analysts fear that the end of the temporary stamp-duty "holiday" on 31 December for properties worth less than £175,000 damped demand.
Investec economist Philip Shaw said: "The key question is whether this [fall in approvals] is a temporary dip or the start of a long-term decline."

Separate figures from estate agents Knight Frank suggested the London housing market is performing better. Central London prices rose 3.2% in February, the strongest growth in a single month since August 2007.

Knight Frank said international buyers were driving demand, with "non-UK buyers" buying 45% of £2 million-plus properties in the past 12 months.