Fewer mortgages approved

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by Kay Murchie

Figures from The British Bankers Association (BBA) show that 66,965 home loans were granted during July — a fall from 75,318 in June. That was also down on the 67,412 home loans approved in July 2006.

The figures are a sure sign that the housing market is starting to slow down after 5 interest rate rises in the last 12 months. The average sum lent was £156,900, this was also down on June’s average of £159,600, while even remortgages, which have been strong during 2007, also fell.

The latest report by Hometrack, the property information service, showed prices were unchanged during August, the first time since November 2005 that they had failed to rise.

In addition, data from The Royal Institution of Chartered Surveyors showed that the number of people looking to purchase a property fell in July at its fastest pace for 3 years.

Rightmove, the property website, recently cautioned that asking prices for homes were falling throughout the country. They were even down in London, where asking prices have risen in the last 12 months.

A spokesperson for the BBA insisted the slowdown was simply due to seasonal factors. However, an economist at investment bank JP Morgan Chase remarked that a decline in approvals of this scale in July would imply that households are adjusting their behaviour to higher rates. The BBA also highlighted that consumers repaid £82million worth of credit card debt in July.