The Council of Mortgage Lenders says the mortgage market is likely to slow in the coming months due to the effect of interest rate rises.
It says while lending volumes continue to look buoyant, they are below the peaks seen in the second half of last year and are starting to level off.
Economist Paul Samter says there has been a rise in remortgage approvals in the first quarter but house price growth and the number of site visitors at new homes has slowed over the same period.
He says the vast majority of first-time buyers are in no imminent risk of falling into arrears following the two rate rises since last August as 80 per cent took out fixed rates. But Samter warns buyers who took out similar deals two or three years ago do now face the prospect of refinancing at higher rates than they initially took out the loan.
London’s mortgage market has been particularly strong, with lending values and volumes rising more than anywhere else over the last year. He says this is in part driven by the success of the financial sector.
Samter says: “We continue to expect house prices to rise by 7 per cent this year, a slight slowdown from 2006, and gross lending to increase to £360bn from £345bn last year.”