Plunge in mortgage deals 'points to end of the UK housing boom'

The number of mortgage approvals for homebuyers suffered a sharp fall for the second successive month in August, according to figures from leading high street banks.

The number of mortgage approvals for homebuyers suffered a sharp fall for the second successive month in August, according to figures from leading high street banks.

The British Bankers' Association said 64,000 new loans were approved for house purchase, the lowest figure since January, and 22 per cent below August 2003's level. The average loan value also fell, to £112,100, compared with a high of £116,500 in June.

The BBA said the figures pointed to a further fall in actual lending in coming months, while analysts said it was further evidence that the property boom was over. David Dooks, the BBA director of statistics, said: "A further weakening in the number of loans approved indicates that households' appetite for secured borrowing is moderating."

It follows figures from Halifax and the Royal Institution of Chartered Surveyors showing that house prices slipped in August. "The BBA data add to the view that the housing market slowdown is becoming more marked and prices will moderate further over the coming months," Howard Archer, at Global Insight, said. "They add to the case for no more interest rate rises this year."

Other analysts said the 9.5 per cent monthly fall from July was less than had been expected following the 20 per cent slump between June and July. "This adds weight to the idea that the housing market is slowing gradually, rather than dropping off a cliff," George Johns, at Barclays Capital, said.

The market is now waiting from the final version of the figures for August from the Bank of England. Last month it reported a record fall of 15,000 approvals in July.

On Thursday Nationwide building society will issue the first estimates for house prices in September, ahead of the Bank's interest rate decision next week.