British mortgage approvals fell to their lowest level in a year in March in a sign that higher interest rates are finally starting to bite and may not need to rise much further.
The Bank of England is widely expected to raise borrowing costs to 5.5% next week to tackle above-target inflation and some economists believe rates may even need to rise as far as 6% to cool the economy.
But figures from the central bank today showed the number of mortgage approvals -- loans for house purchases agreed but not yet made -- fell to 111,000 from a downwardly revised 117,000 in February.
That was the lowest since April 2006 and well below forecasts for a reading of 117,000.
The central bank has already increased interest rates three times since August and BoE Governor Mervyn King has said he would like to see house price growth cool, but so far prices have been rising fast and consumer demand remains robust.
The data also showed mortgage lending continued to rise strongly in March, by £9.902 billion - in line with expectations.
However, the second monthly fall in approvals - they were 118,000 in January - could point to slower house price growth in the months as demand eases.
Survey evidence also suggests headline house price growth is being driven mainly by disproportionate strength in London and the south east.
