Sunday 25 February 2018

UK mortgage approvals lowest in a year

Svenja O’Donnell

UK mortgage approvals fell in April to the lowest in almost a year as tighter credit conditions curbed demand from first-time buyers, preliminary data from the Bank of England showed.

The number of loans granted declined to 47,000 from 51,000 in March, according to a sample from the central bank’s panel of six major lenders released in London today. That’s the lowest since May 2009.

Mortgage approvals have stabilised in recent months, though banks are still approving only about half the loans they were at the peak of the housing boom.

The Council of Mortgage Lenders said in a separate report today that credit availability is “likely to remain restricted for some time.”

“Estate agent contacts reported that the availability of mortgage finance had continued to suppress demand for houses among first-time buyers,” the Bank of England said.

“Most major UK lenders continued to expect the stock of lending to pick up moderately in the remainder of the year, though some lenders noted the downside risks to their projections.”

The CML report showed that gross lending fell 12pc last month from March. Lending dropped 1pc from a year earlier to £10.2bn, it said.

Funding costs

Separate data from the Bank of England showed that M4, the broadest measure of money supply, was unchanged in April from the previous month.

From a year earlier, M4 growth slowed to 3.3pc from 3.5pc, its weakest since September 1999.

Bank of England Governor Mervyn King said on May 12 that risks to UK economic growth have risen after Greece’s fiscal crisis threatened to spread across Europe, roiling markets.

The central bank said today that “major UK lenders indicated that recent financial market turbulence had not materially affected their costs of funding new lending.”

This “partly reflected that they had some discretion about when they approached the market for funding,” the report said.

Recent data show a mixed picture of the housing market. Rightmove Plc said on May 17 that growth in asking prices for homes in England and Wales slowed to 0.7pc in May from 2.6pc in April. In London, prices fell 0.4pc.

A UK house-price gauge from the Royal Institution of Chartered Surveyors rose for the first time in five months in April.

The mortgage-approvals data published today is based on reports from Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society and Royal Bank of Scotland.


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