In its study of the housing market, the Bank reported that the number of mortgages approved for house purchases fell in August to 109,000, down from the 120,000 reported in August 2006.
Net mortgage lending also fell 11 per cent from the August 2006 findings.
However, in a separate review of the housing market, Nationwide suggested that house prices had continued to grow, albeit at their slowest rate for over a year. Fionnuala Earley, chief economist at Nationwide, said: “The development of the wider economy and labour market will determine the trajectory of house prices. A slowdown in demand now looks likely to pull economic growth below its trend rate in the coming quarters and take froth out of the market. A worst case scenario is for the economy to stagnate or fall into recession, with job losses forcing home owners into unwanted sales.”
Commenting on the continued market downturn, Oliver Gilmartin, senior economist at the Royal Institute of Chartered Surveyors, indicated that the market would see a period of ‘sluggish growth. He said: “While monthly measures can bounce around, the underlying trend remains downward and credit market turmoil is yet to show up on the balance sheet of households. The tightening of lending practice that is underway, combined with a softer economic picture, will see a more sluggish housing market over the next year.”
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