Mortgage demand ‘could fall’

Demand for mortgages could be slowing due to rising interest rates, a new study suggests.

According to a study by the British Bankers’ Association (BBA), gross mortgage lending last month stood at £18.6 billion, some five per cent more than the £17.7 billion recorded last year.

However, the number of approvals this March was down by eight per cent from 2006, a figure BBA director of statistics David Dooks claimed to indicate that "weaker demand is starting to emerge".

He added that an increasing number of property buyers and homeowners are seeking to fix the cost of their secured loan borrowing for "protection against rising interest rates".

Mr Dooks commented: "As people continue to reduce their commitments, weaker spending on credit cards and lower new loan borrowing than a year earlier led to another overall fall in personal borrowing."

The BBA study also indicated that personal loan borrowing and overdrafts remained unchanged over the course of March, with credit card borrowing down by £0.1 billion.

Last week, UK and European chief economist for Global Insight Howard Archer claimed that fears of interest rate rises are a "major worry" for secured loan borrowers.

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