(Repeats to fix technical glitch)
By Ana Nicolaci da Costa
LONDON, May 27 (Reuters) - Britain’s banks last month approved the lowest number of mortgages since August 2013 in the latest sign that the housing market is losing some momentum, although prices remain strong.
Economic recovery and record-low interest rates have driven British house prices up by about 10 percent over the past year, raising concern some buyers might be taking on too much debt.
The British Bankers’ Association said its members approved 42,173 mortgages in April, falling for a third straight month and down from 45,045 in March.
New tighter rules on mortgage lending are widely believed to have dampened borrowing in recent months.
Mortgage lending was up 24.5 percent compared with April last year, slowing sharply from previous months, the BBA said on Tuesday.
However, net mortgage lending was at its highest in nearly three years and the average value of mortgages was near a record high, suggesting the rate of price growth could still become a problem.
The Bank of England is expected to announce further mortgage controls, possibly as soon as the June meeting of its Financial Policy Committee which was set up to help avert recklessness in the financial system.
Bank of England officials have become more vocal about their concerns with the housing market in recent weeks, especially the risk of households taking on too much debt.
The BoE is due to publish its own mortgage lending data for April on June 2, after two consecutive months of falling mortgage approvals.
Matthew Pointon, a property economist at consultancy Capital Economics, said the FPC would probably look at whether the new mortgage rules had brought down loan-to-income ratios.
“Today’s release does ring one alarm bell - the average mortgage value increased again to close to a record high. Action to ensure that underwriting standards do not ease any further therefore remains a distinct possibility,” he said.
The average value of loans for house purchases rose to 164,500 pounds ($277,100) in April - its highest since 166,600 in June 2012, which was a record high.
Last week, British bank Lloyd’s said it would limit mortgages to a maximum of four times a borrower’s annual earnings when it is lending more than 500,000 pounds on a property.
Net mortgage lending reached 1.08 billion pounds in April - its highest since August 2011 and up from 1.00 billion pounds in March.
The BoE said last week that policymakers had noted falls in the central bank’s measure of mortgage approvals in February and March but it was too soon to know if that was the result of the new rules.
“Our figures show that housing market is mixed,” said Richard Woolhouse, chief economist BBA.
“The amount of borrowing is however still well below the levels we were seeing before the financial crisis.”
The BoE has said it would adopt further controls on mortgage lending before it resorts to interest rate rises to deal with the housing market. Interest rates are expected to rise in the first half of 2015. ($1 = 0.5936 British Pounds) (Reporting by Ana Nicolaci da Costa; editing by William Schomberg/Ruth Pitchford)