Mortgage lending down as house prices continue to rise
House prices remain on the rise in the UK, according to the Land Registry. New data shows that prices rose by 15.6 percent in the year to April in both Greater London and in Brighton & Hove. In England and Wales as a whole, prices are up by an average of 9.1 percent in April, above the 8.3 percent house price inflation rate in March. The average price of a house in England and Wales is now at £179,935, just over £15,000 more than last year at this time. Prices are rising over twice as fast as they were a year ago and are being driven by the London market, where the average home now costs £333,785. In contrast, prices have risen only 1 percent in Nottingham, where the average price of a house is now £101,810.
Meanwhile, the British Bankers Association said that mortgage lending demand was down in the UK in April. One hundred seventy thousand mortgages were approved for all purposes during the month, up only 1 percent over the same month in 2006. Of those mortgages, 65,000 were approved for home purchases, down by 1,000 from March. Gross lending was at £17.3 billion, 12 percent more than April 2006, but most of that was due to a 10 percent rise in the cost of houses as well as a large number of re-mortgages. Net mortgage lending, which takes out repayments and redemptions, was up by £5 billion in April, just under March’s £5.1 billion.
The Royal Institution of Chartered Surveyors, meanwhile, said that mortgage demand was down 16 percent from its peak, reached in November 2006, but even that decline would not be likely to keep the Bank of England from raising interest rates again. RICS also predicts that house price growth will moderate.
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