Does this sound like a familiar story? A central bank lowers interest rates, cheap money fuels a housing bubble, higher house prices leads to equity withdrawal which feeds inflation. Then the central bank panics, raises interest rates and suddenly no one wants to take out mortgages any more.

That sad old yarn is playing out in the UK. The number of mortgages granted in the UK slumped to a six-year low last month. Overall, the number of mortgages approved fell to 123,518 from 209,669 the previous month. That figure had also fallen from the 140,866 loans that were approved the previous December.

Despite the higher rates, the housing bubble is still evident in the average value of a mortgage , which rose 9 per cent to £146,400 from levels a year ago.

Where do we go from here? Er, down maybe?