Value of mortgage loans increases

Posted: 29 Oct 2007 10:49:34 GMT

The total value of loans for the purpose of buying a house increased in September.

The total value of loans for the purpose of buying a house increased in September.

New figures from the Bank of England show that lending for this reason reached a seven-month peak of £9.8 billion.

This figure is well above the £8.5 billion figure recorded in August and the average for the previous six months which stood at £9.1 billion.

However, mortgage approvals slumped, reaching a 27-month low, as the effects of the global credit crisis were felt.

Despite this, Howard Archer from Global Insight said that he does not expect to see house prices collapse.

"As long as the economy does not slow sharply… we believe that the downside for house prices is likely to be limited by a lack of supply and the fact that few vendors are currently having to sell for 'distressed' reasons, so can afford to delay selling in the hope of eventually achieving a price near to what they are looking for," he revealed.

"Furthermore, it seems likely that the Bank of England will trim interest rates before too long, even though a November move currently looks pretty unlikely," added Mr Archer.

Recent figures have shown that house prices increased in both September and October.

The Land Registry put price inflation at 0.4 per cent in September, while Your Move is reporting that prices increased by 1.2 per cent in October.

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