UK Mortgage Approvals Slide to Seven-Month Low as Housing Market Softens
May 31 The number of mortgages approved by British lenders slid to a seven-month low in April, adding to evidence that the housing market is slowing, Bank of England data showed on Wednesday.
Banks and building societies approved 64,645 mortgages last month, slipping from a downwardly revised 66,043 in March and well below average forecasts in a Reuters poll of economists.
With Britons just over a week away from voting in a national election, the BoE figures added to signs that they are reining in spending the face of higher inflation since last year’s Brexit vote.
Net mortgage lending slowed to its weakest in a year and unsecured lending to consumers also grew by a smaller amount than in March, the BoE said.
Britain’s housing market has slowed markedly – especially in London – since last June’s vote to leave the European Union, although to date there have not been widespread falls in house prices that some commentators had predicted.
The BoE said net mortgage lending, which lags approvals, rose by 2.731 billion pounds in April, short of the poll consensus for an increase of 2.95 billion pounds. That was the smallest rise in a year.
Borrowing by consumers also slowed. Consumer credit in April rose by 1.525 billion pounds, in line with the poll forecast and down from an increase of 1.613 billion pounds in March.
Spending by households helped Britain’s economy to grow strongly last year, despite the shock of the vote in June to leave the European Union.
But there have been growing signs of caution among consumers since the start of 2017, although concerns about the slowdown of the economy are not a major theme in campaigning for next week’s national election. Prime Minister Theresa May wants to strengthen her hand in Britain’s talks to leave the EU.
A survey published earlier on Wednesday showed British consumers were slightly more upbeat about their finances over the next 12 months while they remained gloomy about the economy.
The annual growth rate in consumer borrowing was little changed at 10.3 percent, marginally higher than in March and not far off its 11-year peak of 10.9 percent seen in November 2016.
Net credit card borrowing hit a more than one-year high of 606 million pounds, up from 517 million in March.
The BoE expects economic growth to slow in 2017 as rising inflation, triggered by the post-Brexit vote fall in the value of the pound, eats into the spending power of consumers.
The BoE also said foreign investors were net buyers of British government bonds. Net purchases totalled 1.947 billion pounds in April, the highest amount since November 2016, and up from purchases of 218 million the previous month.