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New mortgage offers down by 10%

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Evidence points to a slowdown in the housing market

Evidence points to a slowdown in the housing market

Evidence points to a slowdown in the housing market

The number of mortgage approvals made to home-buyers was 10% lower in September compared with the same month a year earlier in further signs that the housing market is cooling, banks have reported.

Some 39,271 approvals for house purchase were recorded last month with a total value of £6.4 billion, according to data released by the British Bankers' Association (BBA).

This marks the first time since August 2013 that there have been fewer than 40,000 approvals made to home-buyers over the course of a month.

Richard Woolhouse, chief economist at the BBA, said : " A year ago there were many of us who were concerned by the heady pace of property price rises.

"Today's figures suggest we are now experiencing a steadier housing market and that's no bad thing."

Some experts have said that the housing market appears to be reaching the end of a cycle of strong price growth which has taken place as the economy has picked up and consumer confidence has shown signs of returning.

The Government's flagship Help to Buy scheme, which was put into action across the UK one year ago, helped more people with only small deposits saved to get access to a home loan.

But more recently there have been signs of fewer would-be buyers entering the market and a mood of greater buyer caution amid expectations that interest rates are likely to start rising at some point this year.

Toughened mortgage lending rules came into force in April, which force lenders to demand more evidence from mortgage applicants to prove they can truly afford their repayments.

The figures were released as estate agent Foxtons gave a profits warning, reporting a "sharp and recent slowing of volumes" in London property sales following an exceptionally strong performance in the nine months to June.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said that while the market is "taking a breath", now is a particularly good time for people to be getting a mortgage, as a string of lenders have recently slashed their rates to some of the lowest levels they have ever offered.

The mortgage price war which has broken out in recent weeks is said to have been caused by lenders looking to meet end-of-year targets, falling swap rates which lenders use to price their loans, and banks and building societies looking to play catch-up after disruption was caused earlier this year by the toughened mortgage lending rules bedding in.

Among the new mortgage deals unveiled within the last week, Nationwide Building Society, Barclays and HSBC have all announced products with rates attached which they say are some of the lowest they have ever offered.

The BBA's figures said that non-mortgage borrowing had grown by 2.1% annually, and that rising demand for loans continued to reflect "an easier borrowing climate and improved household finances".

Net borrowing using personal loans and overdrafts is increasing annually after having shrunk for a long period.

Meanwhile, savers have ploughed £10.1 billion into their Isas this year so far, which is slightly lower than the £10.2 billion over the same period last year.

The flow of savings cash has been lower year-on-year despite a shake-up of Isas introduced earlier this year which means that people can put more money away tax free, with the annual limit increased to £15,000.

Some financial websites have pointed out that the Isa rates on offer have generally remained poor in the low interest environment, despite the increase to the Isa limit.

The BBA also said that borrowing by non-financial companies declined in the year to September by £8.9 billion. It said much of the decrease was due to the real estate sector, where companies have been reducing bank borrowing.

There has however been "positive and sustained growth" in borrowing by the manufacturing, wholesale and retail sectors, the BBA said.

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