Mortgage levels cooling down

For many experts is has come as no surprise that mortgage levels appear to be cooling down, with rocketing house prices and rising interest rates finally taking their toll on the mortgage market in the UK. The Bank of England has released figures that indicate that that the housing market and mortgage lending levels are finally slowing down. The number of mortgage loans approved in April 2007 was the same as April 2006, which was 107,000. That is the lowest that levels have fallen to since last April.

Howard Archer from Global Insight stated: 'Housing market activity seems likely to moderate further over the coming months as May's interest rate hike adds to affordability pressures. Furthermore, there is a very real risk that there will be another rise in interest rates before long, which will be a major worry to potential house buyers.'

He also said: 'The Bank of England mortgage approvals data add to the growing evidence that housing market activity is now coming off the boil. This is as higher interest rates and elevated house prices increasingly squeeze new buyers out of the market and make it more difficult for existing house owners to trade up.'

Recent predictions, if correct, could see the prices of properties in the UK coming down over the coming year, and this could see the number of mortgages being applied for and approved rise as those wishing to get onto the property ladder flock to seize the opportunity whilst properties are more affordable. On the other hand, another interest rate rise, which is also predicted, could see a further fall in mortgage levels.