British loan approvals for home purchases plummeted to their lowest level in six years in January, the British Bankers' Association (BBA) said today.
According to the BBA, approvals (loans agreed but not yet made) fell 43 per cent to 31,285 last month compared with 54,443 a year earlier. That was the lowest since January 1999.
Other recent data has suggested that the housing market may have stabilised after slowing significantly since the middle of last year, but the Bank of England said the outlook was always difficult to judge around the turn of the year.
Despite signs that five interest-rate rises between November 2003 and August have helped slow a once-booming housing market, many economists predict the cost of borrowing will climb further beyond 4.75 per cent to combat inflationary pressures.
BBA, whose figures cover most borrowing in Britain, said the latest approvals figures were particularly weak even for a January when lending is typically slow.
The BBA said underlying mortgage lending rose by £4.2 billion sterling last month, a slowdown from a £5.2 billion increase in December.