Housing market coming off the boil, says BBA
- 24 June 2014
- From the section Business
Home sales hit their highest level of the year in May but a banking group says the "heat is coming out of the housing market".
Some 100,360 homes were sold in the UK during the month, up from 95,600 in April, data from HM Revenue and Customs (HMRC) shows.
Sales tend to pick up at this time of year, known as the spring bounce.
But the British Bankers' Association said mortgage approvals - an indicator of future sales - had dropped.
The association said that the total of 65,132 approvals was down for the fourth month in a row and was 3.5% lower overall than in the same month of last year.
The Council of Mortgage Lenders (CML) last week described current mortgage data as a "statistical fog".
Numerous commentators have pointed to the different pace of housing market recovery in different parts of the country. Activity and prices have been rising in London much faster than other parts of the country.
Now Richard Woolhouse, chief economist at the BBA, has said that new affordability tests for home loan applicants - called the Mortgage Market Review - had taken the heat out of the market.
"These are the first mortgage approval figures we have seen since the introduction of the Mortgage Market Review, so it is significant they have fallen for the fourth month in a row," he said.
"This is being driven by a drop in remortgaging and people borrowing against the value of their homes."
The BBA data also suggested a rise in personal saving and more borrowing from businesses.
On Thursday, the Financial Policy Committee of the Bank of England will announce whether it is planning to propose any action to cool the UK housing market.
Lenders told the Bank's Credit Conditions Survey that they expected demand for mortgages to increase in the next three months.