approvals fall of Mortgage

Mortgage approvals fell 11.1 percent in December from a year ago to 45,533, the first annual fall since April, a survey showed on Friday, indicating higher borrowing costs may be dampening demand.
The British Bankers' Association left its figure for underlying net mortgage lending reported last week unrevised at an increase of 5.8 billion pounds, a robust figure but well below the record 6.7 billion pounds' rise recorded in November.
Interest rate futures trimmed losses after the data but investors are still convinced the Bank of England will raise rates by the end of March and might even hike again later in the year, following this month's surprise increase to 5.25 percent.
"The BBA data add to some recent tentative signs that higher interest rates and elevated house prices could be starting to weigh down on housing market activity," said Howard Archer, an economist at Global Insight.
BBA director of statistics David Dooks played down the fall in approvals -- a forward-looking measure of the health of the market -- noting a broader look at the last three months of 2006 showed the housing market remained strong.

"The final quarter of last year, despite seasonally lower activity in December, showed the mortgage market to be stronger than at the same time a year earlier and lending still growing significantly at a time of rising interest rates," he said.
The majority of house market data has depicted strong demand and price increases despite rising borrowing costs. The BoE raised interest rates by a quarter-point this month following similar hikes in August and November last year.
But BBA approvals data has showed signs of weakening since the BoE's monetary tightening cycle began. Approvals rose an annual 20 and 22 percent in May and June respectively last year.