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Financial News: Capital Economics: UK Mortgage Lending Likely To Weaken

Capital Economics: UK Mortgage Lending Likely To Weaken On Brexit Uncertainty

07/29/2019 - 10:13:00 (RTTNews)

(RTTNews) - Lending for house purchase in the UK is set to slow in the coming months due to the Brexit uncertainty, Capital Economics said.

Data from the Bank of England showed on Monday that mortgage approvals for house purchase totaled 66,440 in June, up 1.2 percent from May and by 1.1 percent from a year ago.

Meanwhile, UK Finance data last week showed a sharp 6.9 percent annual rise in mortgage approvals in June.

While the former set of data covers the entire lending market, the latter concerns with only two thirds of it, Capital Economics property economist Hansen Lu said.

"So, when combined, the two datasets suggest that while lenders are successfully competing for market share, they are struggling to expand the total mortgage lending," the economist added.

Lu does not expect the recent rebound in new buyer enquiries, as shown by RICS data, to be sustained due to the uncertainty surrounding the October-end Brexit deadline and house prices that are higher than relative incomes.

"Assuming a no-deal Brexit is avoided, we expect mortgage approvals to end the year down by 1 percent, before recovering modestly in 2020 and 2021," Lu said.

"And in the event of a no-deal, we think transactions could see a 5 percent to 10 percent dip across the end of 2019 and into 2020, before recovering in 2021."

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