Mortgage market begins to cool

Mortgage approvals fell in April compared to the same time last year, as recent interest rate rises have begun to have an affect on the housing market.

The Building Societies Association released figures that suggested the mortgage market was beginning to cool. Approvals in April totalled £3.9m, down from £4.2m in April 2006.

However, building society gross advances were up from last year. Advances stood at £3.7m in April, compared to £3.5m the same month last year.

Adrian Coles, director-general of the Building Societies Association, said: "Gross advances were the highest April figure for three years. However, net advances were down slightly on the same month last year.

"Approvals fell by 8% compared to April 2006. This is the first year-on-year fall since July 2005 – the month preceding the last cut in interest rates.

"We expect lending to remain robust throughout the remainder of the year, although another interest rate rise could dampen growth."

British Bankers’ Association director of statistics, David Dooks, said: "High house prices and increasing monthly repayment costs are causing a slow down in the mortgage market."

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