Mortgage approvals fall by 22%

Equity release and remortgaging also dipped

The number of mortgages approved by banks fell by 22% in August from a year earlier, figures have showed.

According to the British Bankers' Association (BBA), 64,000 property loans were granted last month.

This compares to 81,635 new loans approved in August 2003, representing a fall of 21.6%.

The decline is the latest sign that five interest rate rises since November last year have made would-be house buyers more cautious.

Remortgaging slows

There was also a drop in the number of loans taken out by people who were remortgaging, with the total coming in 6% lower than in August 2003.

And the number of equity release loans taken by homeowners fell by 17% during the same period, reflecting uncertainty over house prices.

Overall, net mortgage lending rose by £4.4bn, the smallest increase since June 2002, and falling short of £5.6bn, the average for the previous six months.

In contrast, spending on credit cards was stronger than in July, rising by £1.2bn, the largest increase since March.

"A further weakening in the numbers of loans approved (particularly for house purchase and equity withdrawal) in August indicates that households' appetite for secured borrowing is moderating," said David Dooks of the BBA.

"However, consumer credit growth in August was stronger than in July, with card borrowing in line with relatively robust retail sales."