Mortgage applications continuing to rise

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The Independent Online

The number of homebuyers applying for a mortgage rose last month, according to new figures yesterday that contradict evidence of a pronounced slowdown in the housing market.

The number of homebuyers applying for a mortgage rose last month, according to new figures yesterday that contradict evidence of a pronounced slowdown in the housing market.

The British Bankers' Association said 88,000 loans were approved in May, a monthly rise of 1 per cent, but only a small recovery from April's 12 per cent slump.

The value of those approvals jumped 40 per cent to £10.2bn, from a year ago. "The housing market appears to be remaining robust," David Dooks, the director of statistics for the BBA, said.

The figures suggested "that lending data will hold up in the coming months", he added.

There were sharper falls in remortgaging and mortgage equity withdrawal - where existing owners cash in rising prices by borrowing against the value of their home. Analysts said this probably reflected the impact of rising interest rates.

However, the value of new loans made last month rose by £4.86bn, the weakest growth since November last year and a 20 per cent slump from April's record £6.11bn.

Analysts said the fall in the lending and a weak recovery in the new approvals figures confirmed anecdotal evidence that the market was cooling.

"The data remain consistent with the idea that the trend in approvals is downward," Malcolm Barr, an economist at JP Morgan, said.

House prices have accelerated this year despite forecasts by the Bank of England that the market would slow and last month hit a year-high of 20 per cent. Next week Nationwide and Halifax will publish estimates for prices in June.

Mervyn King, the Bank's Governor, this week reiterated his warning to househunters to "consider carefully the possible future paths of both house prices and interest rates" when buying and selling houses.

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