LONDON (Reuters) — British mortgage approvals edged higher in April after four months of annual declines but economists still predict the housing market will slow further this year as higher interest rates hit demand.Policymakers unanimously voted to raise rates to 5.5 percent this month, with dove David Blanchflower saying this weekend a buoyant housing market helped convince him to vote for a hike for the first time since joining the Monetary Policy Committee.

Financial markets are now betting rates could rise as high as 6 percent this year as the Bank of England tackles above-target inflation, which could pile up trouble for debt-laden Britons amid signs the housing market is already coming off the boil.

"Given the current environment of poor affordability, rising interest rates and falling buyer interest, we continue to expect mortgage demand to cool markedly over the course of 2007," said Seema Shah, a property economist at Capital Economics.

Economists said British Bankers' Association data yesterday showing mortgage approvals rose 1 percent to 64,815 last month was just a blip.

They said this month's nudge higher does little to alter the weakening trend in approvals, given an annual fall of 12 percent in March, 5 percent in February and January and 11 percent in December, according to the BBA.

Official seasonally-adjusted BoE figures have shadowed that decline, with analysts expecting a further fall in April approvals to 110,000 from 113,000 in March when the numbers are published tomorrow.

Furthermore, growth in mortgage lending has slowed and figures from the Royal Institute of Chartered Surveyors show new buyer enquiries have fallen for five months in a row.

However, policymakers have been wary of strong asset price gains this year and house price inflation has held up under the pressure of four rate hikes since August.