In the light of today’s Bank of England figures which show that new mortgage approvals in the UK fell to a 12-month low in April, Mortgage Talk Managing Director Andrew Frankish believes that recent interest rate rises are having a stabilising effect on the housing market.

‘Although some mortgage lenders are still indicating double digit house price inflation, it is clear that the effect of four interest rates since the beginning of August last year have started to put pressure on household finances. The knock on effect is that, in most areas, home values are rising less rapidly,’ states Frankish.

‘Coupled with the uncertainty in the market about the introduction of HIPs, it is apparent that house price increases have definitely slowed. Although a property shortage in the South East has kept demand buoyant, the rush by many home sellers to place their properties on the market before the abortive HIPs June 1st deadline means a greater supply of properties for sale than earlier in the year. The net effect is that there is less upward pressure on prices,’ he adds.

‘In April, mortgage lending rose by £8.9 billion, much less than expected and the weakest rise since September. Additionally, overall consumer debt rose by only £498 million, which is half of what was expected, and the smallest increase since March 1997,’ explains Frankish.

In April, mortgage approvals totalled 107,000, down from 111,000 in March, and representing the third monthly decline in a row.