Mortgage demand slowing

Evidence that the property market has peaked continued to mount today with figures showing mortgage demand slowing during September.

The Bank of England said mortgage lending rose by ?4.5bn last month, an increase of 0.8%, but this was ?600m lower than August's rise.

The value of new loans approved was ?700m lower than the average over the past three months at ?13.8bn, with the number of loans approved dropping to 102,000 from an average of 110,000.

Simon Rubinsohn, chief economist at stockbroker Gerrard, predicted the slowdown in the housing market may last until the end of 2002.

He said: "The figures suggest the peak in the market may have passed. We had a pretty good idea that September would be a bad month because of the high level of uncertainty." Mr Rubinsohn said it was not surprising that the number of loans approved was down as people had been put off house hunting following the events of September 11.

But he added that although mortgage lending fell back slightly it still remained at a relatively high level, with only August and July posting a higher figure.

Going forward, he said the housing market would be driven by the stock market and the employment outlook, with the recently announced redundancies having a "depressing effect" on the market.

Today's figures are in line with ones put out by the British Bankers' Association last week, in which the group reported net lending fell by 9% to an increase of ?3.67bn.

But while mortgage demand fell, consumer credit remained buoyant.

Borrowing by individuals, including bank loans and credit cards, increased by ?1.5bn or 1.1% during September, ?300m higher than August's rise.

Total advances, before repayments and redemptions are taken into account, were also up ?300m on the previous month at ?14.9bn.

Mr Rubinsohn said: "For all the concerns, consumers are still quite happy to take on debt. "But I suspect that we will see spending go off the boil because people are worried about their jobs."

Total lending to individuals, including mortgages and consumer credit, rose by ?6bn or 0.9% during September, though the rise was ?300m lower than August's increase.