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Huge drop in mortgage approvals

Date: Fri, 29 Oct 04 Analysis

New research has shown that the number of mortgages approved by banks fell for the fourth month in a row in September.

Approvals slumped by more than a quarter, according to the British Bankers' Association (BBA).

Interest rate rises over the past year appear to be having a marked impact on prospective buyers, as there was a 29 per cent dip in new loans approved compared to the same month last year.

The news comes as another strong indicator that the housing market is in the midst of a slowdown and the BBA also revealed that gross mortgage lending fell to £16.3 billion in September, the first year-on-year fall for four years.

Experts agreed that the figures are likely to result in a continuing downward trend in the market.

Global Insight's chief UK economist Howard Archer commented: "The data points to the housing market slowdown deepening over the next few months at least."

However, analysts from Barclays Capital told the Times that the figures do not suggest there will be a crash in the market, saying prices will "fall back gradually, rather than sharply".

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