The head of the mortgage lenders’ trade association has declared the house price boom over after home loans rose at their weakest rate in two years.
Michael Coogan, the director general of the Council of Mortgage Lenders, said: “What does seem clear, taking all the market data together, is that the market is slowing down.”
The comments followed the release of CML figures showing a 20 per cent slump last month, to 104,000, in the number of loans granted for home purchases.
Data from the British Bankers’ Association showed overall mortgage lending last month at £4.4 billion, its lowest since June 2002 and “notably lower” than July’s £5.4 billion figure.
David Dooks, the BBA director of statistics, said that the August lending slowdown “may be a sign that mortgage demand is moderating in the face of tighter household budgets and a slowing housing market”.
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The figures follow a string of estate agents’ reports of a market slowdown, with Rightmove, the property website, today saying that house prices had stalled in the last four weeks as a typical autumn pick-up failed to materialise.
Mr Coogan said that the August lending data “seem to suggest that the slowdown recorded by estate agents is beginning to make its way through the lending system”.
He added, however, that the market could rebound in 2005 if forecasts prove correct that interest rates are near their peak.
“We need to remain alert to the possibility that there could be a bounce back next year if consumers become complacent about the future direction of interest rates,” Mr Coogan said.
Howard Archer, the Global Insight economist, said: “Evidence that the housing market is losing momentum is coming thick and fast.
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“Nevertheless, it is still difficult to be totally confident that the housing market slowdown is more than just a temporary lull in activity, although we suspect that it is.”
John Butler, the HSBC economist, said that the nature of the lending slowdown was “consistent with the view that the housing market is slowing gradually, rather than abruptly as had been feared”.