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Rate rises dampen mortgage approvals

Evidence is building that the mortgage market is slowing in response to rising interest rates.

Bank of England statistics show the number of mortgage approvals has fallen month on month and is 15 per cent off the high of the autumn and at the lowest level since last April.

The increase in total net lending to individuals in April was £9.4bn while the increase in net lending secured on dwellings was £8.9bn. Both figures were lower than the increase in March and the previous six-month average.

The number of loans approved for house purchase was 107,000 while 98,000 were for remortgaging and 72,000 for other purposes, all lower than the previous month.

Council of Mortgage Lenders economist Paul Samter says first-time-buyer interest was down by 4 per cent in April compared with the same month last year.

He says annual house price growth, currently at 10 per cent, is likely to ease in the second half of the year, which is typical six to nine months after a peak in mortgage approvals.

Samter says: “The economy remains fundamentally healthy and activity in the housing and mortgage markets will pick up again once it is clear that interest rates have peaked.”

Hometrack risk and economics director Gary Styles says: “The latest Bank of England mortgage data for April provides further support to Hometrack’s view that the housing market is at a turning point. Total mortgage approvals have now fallen for two months running and are 0.7 per cent below last year’s level.”


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