- Howard Archer, IHS Global Insight
Finally, some relief in the housing market. For months analysts and policymakers were trying to assess the nation's property market, saying all government incentives and a shortage of supply lead to a bubble that can derail economic recovery. According to the British Bankers' Association, the number of mortgage approvals being approved by High Street banks plunged to 42,173 in April, following a figure of 45,045 a month earlier, posting third consecutive decline and hitting the lowest in eight months. A separate report from the Bank of England showed a similar tendency, with a downward pattern in household borrowing. These figures could indicate a move from the peaks seen several months ago, even though the rate of property prices keeps increasing on the back of a limited supply. In the recent minutes from the BoE, policymakers claimed that the easing in activity in the market was caused by the continuing buoyancy in home values, which was particularly marked in the capital. However, it is hard to say whether the recent deceleration was a response to new rules aimed at preventing consumers from borrowing too much.
Also Tuesday the Confederation of British Industry unveiled a report, saying optimism among the nation's services companies soared to a record in the second quarter. This is an extremely welcoming sign, keeping in mind the sector accounts for the majority of overall economic activity.
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