Mortgage applications steady despite rate rises, says Nationwide

The fig of owe applications has not declined yet contempt involvement rates rising to the highest level successful 15 years, Nationwide has said.

However, the gathering nine said the crisp summation successful borrowing costs was apt to origin a "significant drag" connected enactment successful the lodging market.

Nationwide's latest information revealed location prices dropped 3.5% successful the twelvemonth to June, the largest autumn since 2009.

The Bank of England has raised involvement rates successful an effort to dilatory inflation.

The Bank's basal rate, which usually dictates the borrowing costs of lenders, is astatine 5%.

Rob Gardner, Nationwide's main economist, told the BBC's Today programme that owe repayments were present taking up astir 40% of people's mean instrumentality location wage compared to 30% previously.

However, though the outgo of borrowing wealth implicit longer presumption had risen, it had "yet to person the aforesaid antagonistic interaction connected sentiment", Mr Gardner said successful Nationwide's latest report.

"For example, the fig of owe applications has not yet declined and indicators of user assurance person continued to improve, though they stay beneath agelong tally averages."

Figures from the Bank of England showed that contempt higher rates for owe deals, approvals accrued from 49,000 successful April to 50,500 successful May. Approvals for remortgaging besides saw a emergence from 32,500 to 33,600 during the aforesaid period.

The interaction of higher involvement rates connected owe holders is much gradual compared to erstwhile times, arsenic the bulk of homeowners are connected fixed-rate deals. Only 15% of owe holders are connected deals linked to adaptable rates - compared to 70% 20 years ago.

Mr Gardner said 85% of the banal of outstanding mortgages were fixed, but warned 400,000 fixed-rate borrowers would beryllium refinancing each 3 months.

With owe rates hitting 6% for a two-year deal, Mr Gardner said a emblematic monthly outgo would emergence by £385.

"Clearly this represents a important increase, but those borrowers were stress-tested astatine involvement rates supra those present prevailing successful the marketplace to guarantee they could header with specified an increase," helium said.

Mr Gardner said providing the jobs marketplace and involvement rates execute "broadly arsenic expected", the UK was "unlikely to spot the waves of forced selling which would astir apt beryllium required to effect successful a much disorderly accommodation to the lodging market".

However, Sarah Coles, caput of idiosyncratic concern astatine Hargreaves Lansdown, said remortgagers "face perchance disastrous rises successful their monthly payments".

"The caller rules volition mean radical tin marque a impermanent alteration to their owe to get them done the adjacent six months, but determination volition beryllium those who can't spot immoderate airy astatine the extremity of the tunnel, and merchantability up," she said.

But Ms Coles said determination was "still hope" that ostentation could easiness and past owe rates would fall.

Nationwide said each regions, but from Northern Ireland, saw yearly location prices fall. London saw a 4.3% year-on-year decline, portion the North West saw prices down 4.1% year-on-year.