According to figures from the Council of Mortgage Lenders (CML), recent interest rate rises are deterring buyers. However the spell was seen as temporary as activity looked set to restart as soon as rates have peaked.
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Gross lending was reported as being down by almost two billion pounds in April, at £30.1 billion from £31.8 billion in March – the lowest monthly figure since October 2006.
The CML report stated that the level of property transactions had been very strong in the early months of 2007, but had reflected the strength of demand late last year. Despite this, the number of mortgage approvals for house purchases was running 15 per cent below the high levels of Autumn 2006 and at the lowest level since April last year.
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The greatest fall among the buying community had been with first-time buyers, where numbers were reportedly four per cent down on a year ago. The typical first time buyer now faced borrowing more than 3.3 times their income, and were facing levels of mortgage interest payments relative to income last seen in the early 1990s.
A spokesperson at the CML said: “March was the first month in which the number of loans to home movers fell below that of a year earlier and the number of approvals for further advances has fallen to the lowest level since 2001, suggesting that higher rates are reducing the attractiveness of extracting equity.”
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Paul White, consultant at Belgravia, said: “This is more to do with the cost of housing. The fact that people can’t afford to buy is more important than the interest rate rises.”
