UK mortgage approvals drop in March

New figures from the Bank of England show that the number of mortgage approvals in the UK dropped to 111,000 in March. This was lower than the 117,000 approvals that had been expected, down from the 117,000 approvals in February, and the fewest approvals made in a month since April 2006. Most analysts see the new figures as evidence that recent interest rate hikes in the UK are finally beginning to feed through to the housing market and that the boom in the sector is beginning to slow.

The new numbers, however, are not expected to deter the Bank from issuing another increase in interest rates when the Monetary Policy Committee meets next week. Interest rates in the UK have already risen three times since last August, but until the newest data was released there was little evidence that the hikes have had any impact on the rise in house prices or in the demand for houses. While the most recent surveys have shown prices moderating in some regions, the boom has continued to be strong in London, the South East, and in Northern Ireland.

Meanwhile, however, the construction sector remains strong according to the Chartered Institute for Purchasing and Supply. Its latest figures show that house construction is at its strongest in three years.

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