Data released by the Bank of England confirms a continuing drop on mortgage approvals as the number of loans approved for house purchases in April were 107,000, for remortgaging 98,000 and for other purposes 72,000 were all lower than in March. The numbers are all down significantly on the start of the year.

Four rate rises since August 2006, taking Interest rates to 5.50% are starting to bite. With prospects of at least 1 more rise, the pressure continues to mount on the UK housing market during the traditionally strong summer demand period. However some market analysts suggesting 6% interest rates are failing to take into account that by that time a weak housing market will have a deflationary effect on the UK economy and therefore make the rate rise to 6% less likely.

Other signs of an end to the boom being in sight, are the glut of flats on the market and more to be completed and come on stream as oversupply hits the market. This is very similar to the lead up to the last boom and bust in the late 80's. The Buy to Let sector is increasingly vulnerable to speculators rushing for the exit due to higher interest rates making potential profits reliant on capital gains as rents increasingly are unable to cover costs. This could cause a sharp drop in the UK housing Market over a short time period. The Australian Housing Market experienced a similar sharp 6% slump.

The expectations is of an economic slowdown later this year as world wide inflationary pressures ensure that Interest rates remain in an upward trend across the world and therefore make any prospects of interest rate cuts highly unlikely despite a housing slump, much as the US has experienced over the last 12 months.

By Phillipa Green

HousingMarketForecasts.com is a Free Online Global Housing Markets Analysis Online publication.

Disclaimer - All statements and expressions are the opinion of HousingMarketForecasts.com and are not meant to be investment advice or solicitation or recommendation to establish market positions. Our opinions are subject to change without notice.We recommend that independent professional advice is obtained before you make any investment decisions.

This article maybe reproduced if reprinted in its entirety with attributation to the author and links to http://www.housingmarketforecasts.com

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.