Potential signs of a cooling property market were seen today in figures showing the number of home loans being approved was down year-on-year for the third consecutive month.
The British Bankers' Association (BBA) said that in February just under 55,000 mortgages were taken out by homebuyers, up from January's 42,804.
But the monthly total was down on the 57,385 home purchase loans recorded in the same month last year - the third month in a row that this has happened.
Despite the annual fall in activity, the average mortgage size increased in February to £150,400, up 14% in 12 month.
The BBA said that it has taken just under four years for the average loan size to rise from £100,000 to £150,000, compared to the nine years it took for the typical mortgage to rise from £50,000 to £100,000.
Experts said that continued pressure brought on by a shortage of available housing stock explained the continued strong performance of house prices.
Net mortgage lending rose by £5.2 billion in February, less than the recent monthly average of £5.7 billion.
David Dooks, director of statistics at the BBA, said: "The UK's shortage of housing market supply is clearly evident in the mortgage approvals data.
"The last £50,000 rise in the average house purchase loan has occurred more than twice as quickly as the previous £50,000 increase.
"Demand appears to be moderating however, as the monthly number of house purchase approvals was lower than a year earlier for the third month running and net lending was below trend in February.
Howard Archer, chief UK and European economist at Global Insight, said: "The BBA data suggest that housing market activity is gradually coming off the boil as higher interest rates and elevated house prices increasingly impact on potential buyers."
He added: "Nevertheless, housing market activity still appears to be at relatively elevated levels and it seems that the cumulative 75 basis points increase in interest rates enacted so far since last August, is only gradually feeding through to dampen activity.
"Furthermore, an ongoing shortage of properties in many areas means that pricing power is still significantly in favour of the vendor.
"This is particularly true in London and the South East, where prices are being fuelled by elevated City bonuses as well as a shortage of supply."
Source
http://www.24dash.com/socialhousing/18511.htm
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