New mortgages hit two year high says BoE

Posted: 31 Oct 2006 12:21:52 GMT

New mortgage approvals hit a two year high in September, the Bank of England figures have shown, with 126,000 new home-loans approved over the month

New mortgage approvals hit a two year high in September, the Bank of England figures have shown, with 126,000 new home-loans approved over the month.

The total was £8.9 billion, or 11.2 per cent, higher than during the same period of 2005.

The number of houses coming to market remains low however, with the accumulated demand continuing to stoke house price growth and stretch affordability.

"Higher interest rates and recent buoyant house prices will add to affordability problems and seem likely to increasingly squeeze buyers out of the market," said Howard Archer of Global Insight.

"Significantly, first-time buyers are finding it ever more difficult to break into the housing market, while a growing number of people have missed mortgage payments recently.

"There are also increasing reports that people are finding it more difficult to trade up the housing ladder."

The constraints on new owners and those trying to trade-up, as well as an expected further base-rate rise, would soon begin to moderate growth, added Mr Archer.

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