Mortgage approvals dropping

Growth in mortgage lending seems to be slackening with the number of new loan approvals easing off in June.

12:56 30 July 2004

Growth in mortgage lending seems to be slackening with the number of new loan approvals easing off in June.

The Bank of England's announcement has led analysts to speculate whether consumers' appetite for debt is beginning to dwindle.

However, economists have announced that mortgage lending remained strong in June, growing 9.18 billion, compared with 9.35 billion in May.

In May, mortgage approvals slowed from 124,000 to 114,000, suggesting that the recent boom in mortgage lending and house prices may decrease in the coming months.

Economists have said the figures could indicate consumers are beginning to react to higher interest rates.

"Households are starting to show more of a reaction to rising interest rates," said Jonathan Loynes, economist at Capital Economics.

Since November, the UK has seen four quarter point interest rate rises, and many feel next week could see rates increasing further.

Even so, consumer credit has risen yet again, this time by 2.05 billion - its largest monthly rise since October 2002.

The data follows figures from the British Bankers' Association earlier this month, which showed mortgage lending hit record levels in June, and that loan approval levels similarly remained high.