Home Loans Affected By Rates Increase

Wed, 03 Oct 2007

The number of mortgages approved for people moving home has been hit by a rise in interest rates, resulting in the lowest level of approvals since April, new figures have revealed.

The figures for August, released by the Bank of England figures on Moday, showed 109,000 home loans approvals – a 5 per cent drop from the previous month.

Overall, 269,000 mortgages were approved in August, 16,000 fewer than in July, which adds to the growing evidence that the property market is slowly cooling, following five interest-rate rises in just over a year.

In addition, there was also a fall in the number of remortgages, with a drop in the number of loans approved for those switching to a different deal to 96,000, compared with figures from July showing 100,000.

Gary Styles, Director of strategy, risk and economics at property firm Hometrack, commented: "The UK housing market is at a turning point, with house price growth slowing, mortgage lending falling and mortgage interest rates moving higher for riskier loans ."

"It now looks likely that the housing and mortgage markets will start 2008 with less bounce and vitality than in recent years."
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