Mortgage approvals fall at banks

Is the housing market about to slow down?

Mortgage approvals by the UK's biggest banks dipped slightly in January, said the British Bankers' Association (BBA).

The underlying number of mortgages approved for house purchase last month was 44,804, a fall of 1% from the figures from a year earlier.

But a BBA spokesman said that despite the recent rises in interest rates, lending had not yet begun to subside.

A week earlier, the Council of Mortgage Lenders said January had produced record levels of lending.

"January saw a continued stable demand for mortgages," said David Dooks of the BBA.

"Actual borrowing on mortgages remains strong compared with this time last year, so the impact of higher interest rates has yet to feature."

Impending slowdown?

The three quarter-point increases in interest rates since last summer should, most economists believe, inevitably slow down the property market in due course.

"It was notable that underlying mortgage approvals were down by around 1% year-on-year in number in January," said Howard Archer of Global Insight.

"This was the second successive month that approvals were down year-on-year, and contrasts with the substantial year-on-year increases seen through much of 2006."

Other recent indications of an impending slowdown have come from the Royal Institution of Chartered Surveyors.

Its regular surveys in the past few months have noted a drop-off in the number of enquiries being made by new buyers.

The mortgage approval figures from the BBA cover about half the mortgages lent in the UK.

Full figures covering all mortgage lenders will be published by the Bank of England later this week.