MORTGAGE approvals for house purchases fell back in January to their lowest level in a year as lending slowed, a group of leading lenders reported yesterday.

The British Bankers’ Association said that the number of new approvals — often seen as a leading indicator for future house prices — dropped back to 45,039 in January from 51,233 the previous month.

The figures also showed that approvals were up by 32 per cent from a year ago, and by value up by 47 per cent. Seasonally adjusted underlying mortgage lending fell back to £4.6 billion last month, but analysts noted that this was down from an 18-month high in December and broadly in line with the average increase over the previous six months.

George Johns, of Barclays Capital, calculated from the BBA’s sample of the market that this week the Bank of England would report a total of 117,000 mortgage approvals in January, down from 122,000 in December and below market expectations.

However, he added: “Even so, our sub-consensus forecast is more a reflection of a consolidation from December’s relatively sharp rise, rather than the beginning of a dramatic decline in the level of mortgage approvals.”

The mixed data come against a backdrop of a resurging housing market. John Butler, of HSBC, said that overall house price inflation was now 3 per cent over the year, up from 1.8 per cent five months ago.

Taking the price data from Halifax and the Nationwide, which together supply about a third of all mortgages, suggested that house prices have risen at an annualised rate of more than 7 per cent over the past three months, he said.

David Dooks, of the BBA, said: “Seasonally adjusted net mortgage lending fell back to around the recent trend in January and the level of approvals, in particular for equity withdrawal, held up well in what is traditionally a slow month.”

A quarter-point interest-rate cut in August and a buoyant jobs market have helped to underpin the housing market in recent months.

Howard Archer, of Global Insight, said: “There is undeniably a growing risk that house prices could move markedly higher over the coming months. Indeed, this risk is clearly showing more prominently on the Bank of England’s radar.”

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