Mortgage approvals drop in response to rate hike

2017 ended with no sign of a revival in the housing market. Indeed, coming on top of already high prices and subdued house price expectations, the rate hike led to a sharp dip in mortgage approvals. That is consistent with our view that a revival in house prices in 2018 is unlikely. Indeed, even with the squeeze on real incomes due to end this year, we expect only lacklustre house price growth of around 2% over the next 12 months.