Mortgage lending falls in August

The number of mortgages approved for house purchase in August fell by 11,000 year-on-year in a sign that higher interest rates are now having an effect on the market, new figures from the Bank of England show.

The Bank has revealed that 109,000 home loans were approved over the course of the month compared with 120,000 a year ago, a figure that was also below the current six-month average of 112,000.

Housing equity withdrawal also fell in the second quarter of the year, separate figures from the Bank have shown, down to £10 billion from £13.1 billion in the first quarter.

"This data predates the latest round of turmoil in credit markets, the Northern Rock saga and subsequent hikes in some tracker mortgage rates," said the Royal Institution of Chartered Surveyors' (Rics) chief economist Simon Rubinsohn, according to the BBC, suggesting that lending could fall further in future.

However, interest rates are widely expected to remain at 5.75 per cent for a third consecutive month when the Monetary Policy Committee meets later this week.


© Adfero Ltd