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Signs of market cooling as approved mortgages drop by 12 per cent
Last updated at 16:07pm on 30.04.07
Home loans were down by 12% in March
The number of mortgages approved in March was down 12 per cent on the previous year according to new figures, indicating the market is cooling down.
The British Bankers' Association (BBA) said 75,098 homebuyer loans were agreed during the month, up on February's total in line with seasonal trends.
But the figure was 10,000 lower than the same period in 2006 - a potential sign that some of the heat may be coming out of the market.
Overall, there were 198,000 mortgages approved for all purposes in March, representing £22.3 billion.
The average size of a loan approved for house purchase was recorded at £150,800, 12 per cent higher than a year earlier.
This rise negated the effect of fewer loans, with gross mortgage lending in March hitting £18.6 billion, up 5 per cent annually.
Underlying net lending rose by £5.1 billion during the month, similar to February's increase, but less than the recent average of £5.5 billion, the BBA said.
Figures for unsecured borrowing showed that consumers' appetite for credit continues to ebb. Lending on credit cards dropped by £100million in March while borrowing on personal loans and overdrafts remained largely unchanged.
David Dooks, director of statistics at the British Bankers' Association, said: "Strong levels of gross mortgage lending reflect homebuyers and homeowners seeking out fixed rate mortgages as protection against rising interest rates.
"However, in the last two months net lending has risen less sharply and, compared to the same time last year, the number of mortgages approved in March was lower, indicating that weaker demand is starting to emerge."
He added: "As people continue to reduce their commitments, weaker spending on credit cards and lower new loan borrowing than a year earlier led to another fall in personal borrowing."
