U.K. Mortgage Approvals Rose in June Amid Housing Revival
July 30,2015
U.K. mortgage approvals rose more than economists forecast in June in a sign of continued momentum in the housing market. Lending to businesses fell the most on record.
Home-loan approvals climbed to 66,582 from an upwardly revised 64,826 in May, the Bank of England said in London on Wednesday. Economists had forecast a figure of 66,000, according to a Bloomberg survey.
The figures chime with recent surveys showing renewed strength in the housing market following the May general election as employment prospects improve, wages increase and households take advantage of record-low mortgage rates. By contrast, lending to non-financial businesses fell by 5.5 billion pounds ($8.6 billion) last month, the biggest drop since records began in May 2011, the BOE said.
The pound showed little reaction to the figures and was trading at $1.5612 as of 9:32 a.m. London time, unchanged from Tuesday.
The BOE report also showed that net mortgage lending — gross loans less repayments — was 2.6 billion pounds in June, the most since July 2008. Net consumer credit totaled 1.2 billion pounds.
Cheap borrowing costs are stoking housing demand and helping put upward pressure on prices. The effective interest rate on new mortgages fell 3 basis points to 2.56 percent. The rate on outstanding secured loans declined 2 basis points to 3.09 percent. Both were the lowest on record.
BOE Spotlight
BOE Governor Mark Carney said last month he’s maintaining measures introduced a year ago aimed at restricting riskier mortgage borrowing because of the momentum in the housing market. The so-called buy-to-let market is in the spotlight at the central bank, with officials reviewing the sector and potential threats to financial stability from the sector.
The BOE said there was no anecdotal evidence to explain the drop in business lending last month. Within the total, loans to small and medium-sized enterprises rose 353 million pounds.
M4, a broad measure of money supply, fell 0.5 percent from the previous month and was 0.3 percent lower than a year earlier. An underlying measure of M4 — excluding so-called intermediate and other financial corporations — increased 3.8 percent on a three-month annualized basis.
Non-residents sold a net 4.3 billion pounds of gilts in June. It followed net purchases of 8.5 billion pounds in May.
