The Daily Telegraph

Lending dip signals modest increase in house prices

- By Tim Wallace

MORTGAGE lending slowed in February in the latest sign that the housing market is settling into a period of modest price rises rather than a boom or a slump.

High prices combined with relatively weak demand from landlords, who have been hit with extra taxes, mean the market is growing only modestly.

A total of 42,613 loans were given out for house purchases last month, the British Bankers’ Associatio­n said, down from 44,142 in January and 44,678 a year earlier. The number of remortgage­s held steady on the year at 25,414. By value, the average new loan rose to £185,800, from £180,900 in February 2016, as house prices continue to climb.

“The sluggish recovery in approvals has also been down to buy-to-let lending,” said Hansen Lu, at Capital Economics. “That collapsed in April last year following the introducti­on of the stamp-duty surcharge, and has since struggled to make any headway.”

The sluggish demand from buyers will hit price growth, but a shortage of properties means prices are unlikely to dip, economists believe. Analysts predict modest price rises during the year.

Meanwhile, households are cutting credit card debt, unwinding some of the boom in borrowing before Christmas. Total credit card debt slid by £24m to £62.9bn in February.

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