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By Christina Fincher
LONDON, Jan 26 (Reuters) - Approvals for new home loans in Britain rose in December from a record low, data showed on Monday, but analysts said this did not portend a housing market recovery.
The British Bankers' Association said 22,051 mortgages were approved last month, up from November's record low of 17,339 but almost 50 percent lower than the same month last year.
"The tick up in December is nothing more than a release in pent-up demand," said BBA statistics director David Dooks. "I don't think it's reflective of a recovery. What the numbers are showing is a reflection of the recession. The mortgage market is dead apart from those people who have to move. The lending is not there."
House prices in Britain fell around 16 percent last year as the credit crisis made it harder and more expensive to get finance. Despite unprecedented action to try to get credit flowing through the economy, most experts are forecasting another double-digit decline in 2009.
The number of mortgages approved for house purchase for 2008 as a whole was less than half that of the previous year, highlighting the extent to which banks have cut back on lending in an attempt to repair their overstretched balance sheets.
MORTGAGE COLLAPSE
The collapse of the securitised debt markets, which accounted for two thirds of mortgage finance during the housing market boom, has sent shockwaves throughout the economy.
Unemployment in Britain has soared in recent months as banks have pulled credit lines, forcing companies to make dramatic cost cuts.
In a bid to revive the economy, the Bank of England has cut interest rates to a record low and the government announced a 20 billion pound fiscal stimulus package in its pre-budget report last November.
Further stimulus measures are likely to be announced in the budget this spring. A Treasury spokesman said no decision had been taken on the timing of the budget.
So far there has been little sign that radical policy action is easing the credit squeeze.
Growth in British net mortgage lending was 2.9 billion pounds ($4 billion) in December, the lowest since August and well below the average of the previous six months.
"Housing market activity is set for another torrid year," said Seema Shah, property economist at Capital Economics. "While mortgage approvals can hardly fall significantly further from here, with unemployment soaring, confidence plummeting and lending criteria tightening, activity is unlikely to return to more normal levels for the foreseeable future."
(Additional reporting by David Milliken, Fiona Shaikh and Sumeet Desai; editing by David Stamp)