Repeated decisions by the Bank of England’s monetary policy committee (MPC) to increase interest rates have resulted in a cooling of the mortgage market, according to one industry body.
The British Bankers’ Association (BBA) has announced figures suggesting that gross mortgage lending for March had increased by five per cent on last year, reaching £18.6 billion.
However, the rate of increase in net lending has started to tail off and the number of mortgages approved fell by eight per cent compared to 2006, the BBA asserts, suggesting that interest rates are starting to dampen the market.
David Dooks, director of statistics at the association, remarks: "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."
Approvals for house purchases were down by 12 per cent by number compared with 2006, although they fell by only one per cent by value.
In other news, the BBA yesterday called for greater coordination in financial regulation in order to maintain the UK’s position as a premier international financial services market.