Financial News: UK Mortgage Approvals At 5-Month High

UK Mortgage Approvals At 5-Month High

05/04/2023 - 08:49:00 (RTTNews)

(RTTNews) - UK mortgage approvals increased more than expected to a five-month high in March suggesting an improvement in the housing market activity, data from the Bank of England showed Thursday. However, mortgage lending ground to a halt in March, marking the lowest since mid-2021.

The number of mortgage approvals for house purchases increased to 52,000 from 44,100 in February. Approvals were forecast to rise moderately to 46,300. The latest figure was the highest since October 2022.

The BoE said the 'effective' interest rate, the actual interest rate paid on newly drawn mortgages increased by 17 basis points to 4.41 percent in March.

The <a href=https://www.rttnews.com/3352153/bank-of-england-raises-key-rate-further-to-tame-inflation.aspx target=_blank >BoE</a> has lifted the bank rate by 415 basis points in the current tightening cycle that began in December 2021 with an aim to bring inflation down to the 2 percent target.

Meanwhile, data today showed that borrowing of mortgage debt by individuals fell further to net zero from a net flow of GBP 0.7 billion in February. This was the lowest level since July 2021. Excluding the pandemic period, net borrowing was the weakest since June 2011.

At the same time, gross lending increased slightly to GBP 20.6 billion from GBP 20.4 billion in February.

Consumer credit climbed GBP 1.6 billion compared with GBP 1.5 billion borrowing in February. Consumer credit grew 7.9 percent annually, faster than the 7.7 percent rise in the previous month, data showed.

The additional consumer credit borrowing of GBP 1.6 billion was split between GBP 0.7 billion of borrowing on credit cards and GBP 0.9 billion of borrowing through other forms of consumer credit.

Further, non-financial companies repaid GBP 2.6 billion in market finance, while non-financial businesses borrowed GBP 2.5 billion in bank loans in March.

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