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Financial News: UK Mortgage Approvals Lowest Since 2017; Consumer Borrowin

UK Mortgage Approvals Lowest Since 2017; Consumer Borrowing Slows Sharply

05/01/2019 - 08:03:00 (RTTNews)

(RTTNews) - UK mortgage approvals for house purchase fell to its lowest level in over a year in March and consumer credit growth was the weakest in nearly five-and-a-half years as the original Brexit deadline approached, figures from the Bank of England showed on Wednesday.

Mortgage approvals for house purchase fell to 62,341 in March from a revised 65,340 in February. Economists had forecast 64,400 approvals.

Approvals were the lowest since December 2017, when they were 61,508.

In contrast, data released last week by UK Finance had shown that mortgage approvals hit a nine-month high in March.

Net mortgage lending grew to GBP 4.1 billion in March versus GBP 3.3 billion in February. Economists had forecast GBP 3.5 billion lending.

UK house prices rose at the fastest annual pace in five months in April, but inflation remained subdued, survey data from the Nationwide housing society showed earlier on Wednesday. The house price index rose 0.9 percent year-on-year following a 0.7 percent increase in March. Economists had expected the inflation rate to remain unchanged.

Consumer credit grew by GBP 0.5 billion in March after a GBP 1.2 billion increase in February. Economists had forecast GBP 1 billion growth.

The latest increase was the lowest since November 2013 and the weakness was largely due to a fall in new lending for car finance, the bank said. Stronger repayments led to a fall in credit card borrowing.

The annual growth rate of consumer credit fell to 6.4 percent in March, which was the lowest since September 2014, when it was 6.1 percent. Meanwhile, the growth rate of credit card lending ticked up for the first time since June 2018, to 6.6 percent.

"The subdued rise in borrowing in March may be because Brexit has sapped households' desire to borrow to buy big items," Capital Economics economist Paul Dales said.

"At the aggregate level, low interest rates mean that debt is still manageable."

The UK's departure from the European Union was originally scheduled to take place on March 29. However, the lack of a post-Brexit deal led the EU to set a new deadline of October 31,

Due to the lack of agreement on a Brexit deal, UK Prime Minister Theresa May requested for an extension of the original deadline of March 29 for the UK to exit the European Union. Consequently, the EU agreed that the country should leave the union by October 31.

Annual growth in lending to large non-financial businesses eased to 3.9 percent from 5.6 percent in the previous month, the central bank data showed. Loans to small and medium enterprises decreased 0.1 percent annually, reversing the similar size growth in the previous month.

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