UK mortgage approvals drop to nine-month low in June – BoE
Britain’s housing market and consumer economy lost a small amount of momentum last month as mortgage approvals dropped to a nine-month low and unsecured lending growth slowed further from last year’s 11-year high.
The figures from the Bank of England add to the case for its Monetary Policy Committee to keep interest rates at a record-low 0.25 percent on Thursday, and chime with other data which showed lacklustre growth in the overall economy in the second quarter.
The number of mortgages approved for house purchase fell to the lowest since September last year in June at 64,684, down from 65,109 in May and a slightly bigger drop than economists’ forecasts of a decline to 65,000 in a Reuters poll.
Three months ago the BoE forecast that mortgage approvals would average around 71,000 a month in coming quarters.
The growth rate in unsecured consumer lending slowed to 10.0 percent on an annualised basis in three months to June from May’s unexpectedly strong 10.4 percent.
British consumer borrowing had picked up pace in May with unsecured lending growing at close to the 11-year high recorded in November last year.
The central bank warned last week that banks needed to make sure they did not get complacent and mistakenly assume that current low rates of loan defaults would last forever.
The BoE’s MPC meets this week to update their quarterly economic forecasts and decide whether to raise interest rates from their record-low 0.25 percent.
For a while it had looked as if the BoE might finally be getting ready to raise rates, but Governor Mark Carney and most of his top officials seem set to remain in wait-and-see mode after a run of weak data and deep uncertainty about the impact of Brexit on the economy.
Britain’s economy has had its slowest start to the year since 2012, as consumers have come under pressure from a big rise in inflation since sterling fell after last year’s Brexit vote.
Monday’s figures showed net mortgage lending – which lags behind mortgage approvals – rose by 4.149 billion pounds in June, the biggest rise since March 2016 and 3.1 percent up on a year earlier, the biggest increase since October.
Consumer lending increased by 1.458 billion pounds compared with a forecast rise of 1.5 billion.
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