Housing marked set for gentle slowdown

According to The Building Societies Association, the market may be set for a gentle slow down.

12:11 21 June 2004

According to the Building Societies Association, the housing market may be set for a gentle slow down.

The association's director-general, Adrian Coles, noted: "Lending is still well ahead of a year ago, but we are expecting a gentle slowdown over the remainder of the year and possible increases in interest rates."

However, he made clear that "this does not mean people should panic."

New figures show that building society gross advances were up on last year's figures, from 3,729 million in May 2003 to 3,801 million this year.

Net advances were 1,301million in May 2004, down from 1,535 million in May 2003. Approvals - where loans have been agreed, but not yet made - decreased over the last twelve months to 4,410 million down from 4,599 million in May 2003.

Mr Coles cautioned consumers by saying: "People should be sensible about the amount of money they can afford to borrow, especially as house prices are likely to rise less rapidly in the future."

On the savings side, Mr Coles said: "As expected savings inflows have declined from the high figure in April, which is always driven by the beginning and end of the ISA season."

In the savings market, building societies had net inflows of 475 million in May 2004, down from 564 million in May 2003.

Additionally, building society saw net receipts into cash ISAs of 460 million in May 2004.

Mr Coles concluded by saying: "Now is a good time for savers to review their investments following the sharp increase in interest rates over the last nine months."