Mortgage approvals fall 11 percent in February – UK Finance

LONDON (Reuters) – The number of mortgage approvals by British banks during February fell by 11 percent compared with the same month last year after rising for the first time in four months in January, industry data showed on Monday.

Mortgage approvals fell to 38,120 from 40,031 in January, industry association UK Finance said, suggesting a downturn in Britain’s housing market since the 2016 Brexit vote remains.

Consumer credit rose by 0.8 percent in annual terms in February, having risen by 0.6 percent in January which was its weakest increase since UK Finance’s new consumer credit series started in April 2017.

British households have been hit by a squeeze in their spending power after the 2016 Brexit vote pushed up inflation.

Net credit card lending amounted to 309 million pounds last month, down slightly from a net increase of 325 million pounds in January.

Eric Leenders, managing director of personal finance at UK Finance, said more home-owners were seeking remortgaging deals ahead of expected further interest rate rises by the Bank of England later this year.

Eric Leenders said:

“We are also seeing a continuing rise in credit card spending, reflecting the growing number of transactions carried out using cards, while other forms of borrowing such as overdrafts continue to fall.”

Stephen Pegge, UK Finance’s managing director for commercial finance, said bank lending to businesses saw modest year-on-year growth in February, driven by investment by manufacturers.

Stephen Pegge said:

“Credit balances have risen at an even faster rate as companies build reserves in the face of economic uncertainty and its effect on longer term business confidence.”

The Bank of England is due to publish broader lending figures on Thursday.

Kindly shared by Reuters UK