Mortgage approvals fall in February
Mortgage approvals fall in February
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Wednesday, 29, Mar 2006 04:12
The number and value of mortgage approvals fell in February, casting doubts over recent indications of a moderate housing market upturn.
Official Bank of England figures show that the number of loans approved for house purchase fell to 115,000 from a six-month high of 121,000 in December and January.
The value of mortgages approved last month also fell back to £28.6 billion from £28.9 billion last month, representing the first fall in mortgage approvals since the beginning of the house market slump in November 2004.
Overall mortgage lending - relating to completed loans - also rose less sharply last month, increasing by £8.1 billion, compared to £8.9 billion in January.
Howard Archer, chief UK economist at analyst Global Insight, believes that the slowdown in mortgage activity is a reflection that the recent moderate upturn in house prices is pricing prospective buyers out of the market.
"Although the mortgage data are still robust, the softer data for February could be an early sign that the recent firming in house prices is starting to have a dampening effect on market activity," Mr Archer said.
"This reinforces our suspicion that house prices will be unable to sustain sharp gains for an extended period."
Earlier this week, housing research company Hometrack said that house prices rose by 0.5 per cent in March, the fourth consecutive monthly rise, with property values up year-on-year for the first time since January 2005.
The British Bankers Association (BBA) on Monday reported a £0.2 billion month-on-month fall in seasonally adjusted mortgage lending in February.
Today's figures contrast with statistics released on Monday by the British Bankers Association (BBA), which showed a 19 per cent increase in mortgage approvals last month.