Higher interest rates 'impacting on mortgage market'

Recent increases in interest rates are impacting on both mortgage lending and credit card borrowing, it has been revealed.

Figures released by the British Bankers’ Association (BBA) show that 193,850 mortgages were approved last month – an eight per cent fall on the year ago results.

Meanwhile, credit card borrowing fell by a net £100 million in June as consumers continued attempts to reign in expenditure.

"Although the trend in net mortgage lending is being maintained, approval numbers for house purchase are well down on this time last year, suggesting that market demand may be reacting to higher mortgage costs," confirmed David Dooks, BBA director of statistics.

"Spending on credit cards was lower than at the same time last year, reflecting weaker retail sales but the reducing appetite for unsecured borrowing continues the pattern seen over the last two years."

At the last meeting of the Bank of England’s monetary policy committee, members chose to increase the base rate to 5.75 per cent – the highest level for six-and-a-half years.