Tuesday, August 31 2004 Mortgage loans have fallen sharply, with the latest figures showing that just 97,000 mortgages were approved for house purchase in July, compared with the average of 122,500 in the six months to June and a recent high of 132,000 in December 2003, according to the Bank of England.
Demand has also fallen in comparison to July last year, when 113,000 mortgages were approved for house purchase.
The value of mortgage loans approved dropped in July to £24billion compared with the average of £26billion in the six months to June.
The news comes as speculation over the future of the property market comes to a head, and as a result Bank of England’s attempts to cool the market through consecutive interest rate increases.
Milan Khatri, Economist at the Royal Institute of Chartered Surveyors said: ‘Chartered surveyors have noted a marked slowdown in the housing market since the spring, with buyer activity down significantly. Investors are showing more caution about entering the market. The overall outlook for the market is now steadier as activity becomes less frenetic.
‘The top end of the market has been leading the slowdown following the upturn at the end of last year and the start of this year, which came about as a result of the low interest rates, end of the war in Iraq, and the boost in the stock market. The interest rate rises, however, are now having an impact.
‘This is not necessarily bad news. If interest rates stay at the same level the market will stagnate, slowing to normal levels following the long boom period. There is nothing for anyone to worry about because the economy is holding up.’
The Bank of England
RICS