Interest rates calm mortgage borrowing

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Higher interest rates are helping to subdue high street lending levels, a new study reveals.

Figures from the British Bankers' Association (BBA) show that the number of mortgages approved in April stood at 170,000 - just one per cent more than in the same month of last year. The total amount given out over the month was £17.3 billion - 12 per cent more than in April 2006.

This reflects ten per cent growth in house prices and strong re-mortgaging activity, the BBA says.

"The latest three months have seen net mortgage lending stabilise, with rises (albeit still around £5bn a month) below the average of the previous six months," David Dooks, director of statistics at the BBA, commented.

"The picture from approvals points to mortgage demand weakening further as the year progresses and the cumulative effect of higher interest rates bites harder.

"Another net repayment on credit cards means that repayments have exceeded cardholders' spending in ten of the last 12 months, as they continue to run down their credit card borrowing," he added.

Seasonal adjustment on April 2007's credit card spending revealed that underlying net lending decreased by £143 compared to the same month of last year.

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