Financial News: UK Mortgage Approvals Hit 17-Month High

UK Mortgage Approvals Hit 17-Month High

04/02/2024 - 07:58:00 (RTTNews)

(RTTNews) - UK mortgage approvals increased more than expected to a 17-month high in February as markets expect interest rate cuts this year.

Mortgage approvals for house purchases rose to 60,400 in February from 56,100 in January, the Bank of England reported Tuesday. This was the highest since September 2022 and also exceeded the forecast of 57,000.

Net approvals for remortgaging also increased in February, to 37,700 from 30,900 in the previous month.

The actual interest paid or the 'effective' interest rate dropped by 29 basis points to 4.90 percent in February.

Individuals borrowed a net GBP 1.5 billion of mortgage debt in February compared to GBP 1.1 billion of net repayments in January. This was the highest borrowing since January 2023.

Gross lending fell to GBP 18.0 billion from GBP 17.1 billion a month ago. Meanwhile, gross repayments decreased to GBP 16.7 billion from GBP 18.5 billion in January.

Data showed that net consumer credit decreased to GBP 1.4 billion in February from GBP 1.8 billion in the previous month.

Further, companies repaid GBP 3.3 billion of loans to banks and building societies compared to a GBP 0.2 billion of net repayment in January.

The drop in mortgage rates boosted mortgage approvals to a 17-month high in February but this is unlikely to continue in the near term, economists at Capital Economics said. If interest rates are cut in the summer and faster than most expect, mortgage lending will strengthen further towards the end of the year, they added.

The Bank of England had kept its benchmark bank rate unchanged at a 16-year high of 5.25 percent for the fifth straight session in March. Data released by the mortgage lender Nationwide Building Society showed that house prices posted a monthly fall of 0.2 percent in March, in contrast to the 0.7 percent rise in February.

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