Wednesday 18 September 2019

Mortgage approvals fall to three-month low in September

Some 66,232 loans for house purchase were given the green light in September.

Money stock
Money stock

By Ben Woods, Press Association Chief City Correspondent

The number of mortgage approvals being made to home buyers dropped to a three-month low in September, according to Bank of England figures.

Some 66,232 loans for house purchase were given the green light in September, marking the lowest monthly figure since June 2017.

It is the second month in a row that mortgage approvals have fallen and comes after a six-month high of 69,360 in July.

However, the Bank’s Money and Credit report showed re-mortgage loans picked up in September to 47,598, rising from 46,270 the month before.

Homeowners are bracing for a potential interest rate hike on Thursday, with economists widely predicting that the Bank’s Monetary Policy Committee (MPC) will hike the cost of borrowing from record lows of 0.25%.

The report also showed that annual growth in consumer credit eased to 9.9% in September, matching levels seen in July.

The amount borrowed for the month reached £1.6 billion, down from £1.8 billion in August.

Howard Archer, EY ITEM Club’s chief economic adviser, said: “September’s second successive dip in mortgage approvals from a six-month high in July reinforces our belief that there is unlikely to be a sustained, significant upturn in housing market activity any time soon

“Housing market activity remains under pressure from the serious squeeze on consumers, fragile confidence and appreciable caution over engaging in major transactions.

“A likely Bank of England interest rate hike on Thursday may very well also weigh down on housing market activity.

“While consumer credit growth has come modestly off its peak levels, it remains too high for comfort and the Bank of England will likely be disappointed it has been pretty sticky in recent months.”

Loans to large non-financial businesses fell by £1.4 billion last month, in contrast to a £5 billion drop in August, according to the Bank’s report.

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