UK households saw their income drop by an average of £31,000 last year because of the credit crunch and recession, new figures reveal.

A study for the BBC found that falling house prices were responsible for a £422 billion decrease in the value of the UK’s housing wealth, while falling share prices reduced other financial wealth by £393 billion.

According to calculations by the Halifax bank, this was the first such drop in household wealth since 2001. The bank worked out that the accumulated wealth of the UK’s 26,652,000 homes fell by a total of £815 billion  in the course of last year as the economic downturn undermined house prices and stock market investments - an overall drop of 12%.

“It is a huge drop to happen in one year,” said Martin Ellis, chief economist at the Halifax.

“But we have had the biggest house price fall yet seen in just one year, combined with a fall in equity prices,” he added.

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Mortgage lending is on the up, having risen 19% higher during July than in the same month of last year, according to the Council of Mortgage Lenders (CML).

This marks the first significant increase since February 2007, when the number of home loans increased by 5.6 per cent compared to the same month a year earlier, the group said.

However, the CML said that the figures should be treated with caution, warning that ongoing problems affecting the mortgage market could hinder further growth.

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More than 2,000 families will move into a new home after the government today gave the go-ahead for the largest council house building project in a generation.

New council houses will be built in 47 regions across England, including 12 housing projects in the Midlands, seven in the North West, six in London, six in Yorkshire and Humber, six in the South West, five in the North East, four in the South East and one in eastern England.

Work will begin by the end of the year, with some accommodation available to struggling tenants within 12 months. The government will provide £127 million of funding towards the £250 million scheme, and councils will pay for the remainder.

Most social housing is currently built by housing associations which were responsible for the construction of almost 40,000 properties last year.

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Tenants’ ability to strike a deal with landlords over rent has diminished as fewer properties are coming onto the rental market, surveyors say.

The falling cost of rents slowed in the three months to July, according to survey by the Royal Institution of Chartered Surveyors (Rics).

As the market stables, homeowners who previously let out their properties are deciding to sell their homes. This leaves tenants with less bargaining power over the price of rent.

However, Simon Rubinsohn, chief economist at Rics, said that tenants were still in a “relatively strong” position compared with two years ago.

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A Nottinghamshire entrepreneur who featured in the Channel 4 series Secret Millionaire has been declared bankrupt.

Property Tycoon Chek Whyte is believed to have debts of around £30 million, and had attempted to make arrangements to continue trading whilst paying off his debts. He was issued with a bankruptcy order following a petition by creditor Halls Furnishings Ltd, which trades as Loft Interiors of Manchester.

The self-made millionaire appeared on the Channel 4 series in 2007 and donated money to a number of good causes in Salford, Greater Manchester.

Whyte made his fortune in the property and construction industry, renovating dilapidated listed buildings such as Colwick Hall and Clifton Hall in Nottingham.

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In a bid to gain an even larger share of the mortgage market, HSBC this morning announced the launch of its cheapest ever home loan - a two-year discount deal with a starting rate of 1.99%.

The Woolwich and Cheltenham & Gloucester have also announced cuts to their fixed-rate mortgages.

HSBC’s discount rate applies to borrowers with a 40% deposit, and is set at a 1.95% discount to the bank’s standard variable rate of 3.94%.The bank was the UK’s largest lender during the first half of the year.

The deposit needed to secure a mortgage has increased sharply over the past year as lenders restrict credit to borrowers. Currently 27% of new mortgage deals require a deposit of 40%, compared with just 7% of deals a year ago. There’s some good news for first time buyers, however, with a slight increase in the 10% deposit tier this year.

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The total amount of personal debt in the UK has fallen for the first on record, according to new figures from the Bank of England. Mortgage repayments also outstripped new lending for the first time since records began in 1993.

Personal borrowing fell by £600m in July with the amount of money owed by individuals totalling £1.457 trillion. There was a decrease in both mortgages and personal loans.

The steep drop in mortgage lending was driven by the ongoing restriction of the amount banks and building societies are prepared to advance, with the British Bankers’ Association admitting last week that net lending in July fell to its lowest level since October 2000.

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The Ministry of Justice has launched a series of online videos and articles aimed at helping homeowners facing possible repossession.

The advice at www.direct.gov.uk includes articles covering the first arrears right up to what happens at a court hearing, as well as guidance for tenants struggling to pay the rent. Click the links to find advice for homeowners and tenants.

“The Government has taken considerable steps to ensure people struggling to pay their rent or mortgage get the help they need to stay in their homes,” said Justice Minister Bridget Prentice.

“Mortgage repossession figures released earlier this month show that the number of people facing repossession has considerably reduced since this time last year, but we’re not complacent.”

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Mortgage approvals by major banks have risen to a 17 month high, according to figures from the British Bankers’ Association.

The BBA said that 38,181 mortgages were approved in July - a rise of 7.4% compared with June and 77% higher than a year ago. The number of loans approved for people buying a home was at its highest since February 2008.

The figures suggest that the rise in mortgage approvals could continue into the autumn. However, the BBA warned that, whilst new lending had increased significantly, it was still down on expectation despite greater demand from borrowers this season.

Banks appeared more willing to lend to potential buyers, with the average amount borrowed standing at £139,700 in July.

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Mortgage lending is still increasing, according to the latest figures from the Council of Mortgage Lenders (CML).

Gross lending totalled £16 billion in July, an increase of 26% on the previous month, though still over a third lower than the same period last year.

The last few months have seen a steady rise in mortgage lending, house sales and property prices, after the massive slump caused by the banking crisis. However, the CML warned that the housing market would slow down as the year progresses.

“The CML’s July gross lending estimate of £16 billion is the highest level in nine months and consistent with the rise in house purchase approvals,” said the CML’s economist Paul Samter.

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