UK house prices
UK house prices grew by 11.1% on average over the year in May, said NationwideReuters

The pace of house price growth in the UK has picked up to its fastest rate ever.

Nationwide said in its monthly index that the average price of a UK home hit £186,512 in May, an 11.1% increase over the year - the quickest on record - and faster than April's annual rise of 10.9%.

It was the thirteen successive monthly increase, with the average price rising by 0.7% on April.

Soaring demand in the housing market is putting pressure on a constrained supply of homes, with house building levels running at around half that needed in the UK.

And demand is being fuelled by cheap mortgages off the back of ultra-low interest rates and the Help to Buy scheme.

But mortgage approvals slowed for a third successive month in April.

Assuming a 10% deposit, a 5% interest rate and a 25-year term, the monthly mortgage repayment on a loan to buy a home at the price of the Nationwide average would be £987.

According to the Bank of England there were 62,918 mortgage approvals for home purchases during April 2014, down from 66,563 in March.

At the end of April, the Financial Conduct Authority (FCA) imposed stricter affordability tests on rein in riskier lending after its Mortgage Market Review (MMR).

In the months ahead of the rules coming into force, mortgage lenders had already begun to adjust their affordability tests to comply with the incoming regime.

These tests look at if potential borrowers can afford their repayments in the event of a number of different scenarios, such as interest rates going up.

"There have been tentative signs that activity in the housing market may be starting to moderate, with mortgage approvals in April around 17% below January's high," said Robert Gardner, Nationwide's chief economist.

"It is too early to say whether nationally this is indicative of a cooling trend in the wider market. The slowdown may partly be the result of the introduction of MMR measures, which may take a few months to bed down.

"The underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer."

He added: "However, with mortgage rates close to all-time lows and labour market conditions continuing to improve, underlying demand for homes is likely to remain strong."