Loans hint to 'cooling home market'
Updated on 28 March 2007
Potential signs of a cooling property market have been seen in figures showing the number of home loans being approved was down year-on-year for the third consecutive month.
The British Bankers' Association (BBA) said that in February just under 55,000 mortgages were taken out by homebuyers, up from January's 42,804.
But the monthly total was down on the 57,385 home purchase loans recorded in the same month last year - the third month in a row that this has happened.
Despite the annual fall in activity, the average mortgage size increased in February to £150,400, up 14% in 12 month.
The BBA said that it has taken just under four years for the average loan size to rise from £100,000 to £150,000, compared to the nine years it took for the typical mortgage to rise from £50,000 to £100,000.
Experts said that continued pressure brought on by a shortage of available housing stock explained the continued strong performance of house prices.
Net mortgage lending rose by £5.2 billion in February, less than the recent monthly average of £5.7 billion.
David Dooks, director of statistics at the BBA, said: "The UK's shortage of housing market supply is clearly evident in the mortgage approvals data.
"The last £50,000 rise in the average house purchase loan has occurred more than twice as quickly as the previous £50,000 increase.
"Demand appears to be moderating however, as the monthly number of house purchase approvals was lower than a year earlier for the third month running and net lending was below trend in February."
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