U.K. Mortgage Approvals Climb to Four-Month High in September

U.K. mortgage approvals rose to a four-month high in September as the Bank of England’s new credit-easing plan boosted the availability of home loans.

Lenders granted 50,024 mortgages, compared with a revised 47,921 the previous month, the Bank of England said today in London. Economists forecast that approvals would gain to 48,700 from an initially reported 47,665 in August, based on the median forecast of 18 economists in Bloomberg survey.

While approvals increased, Hometrack Ltd. said today that house prices fell in October for a fourth month and a property- market recovery is unlikely without sustained economic growth. Bank of England policy makers must decide whether to inject more stimulus into the economy next week as they assess the impact of their Funding for Lending Scheme, which aims to provide banks with cheap funding.

“The decline in house prices should be limited by recent healthy employment growth and low interest rates, while mortgages could become increasingly available helped by the FLS,” Howard Archer, an economist at IHS Global Insight in London, said before the data was released. “However, we are doubtful that the economy can grow fast enough on a sustained basis in the near term at least to really help the housing market.”

Net mortgage lending was 491 million pounds ($798 million) in September, while consumer credit was 1.2 billion pounds, the highest since February 2008, the central bank said. Credit-card lending was 307 million pounds while other personal lending was 893 million pounds, also the highest since February 2008.

BOE Program

The central bank is trying to boost credit growth with its Funding for Lending program, which began in August, and a house- price survey today said property pessimism has eased. The Bank of England said on Sept. 25 that 13 banks had signed up to the FLS so far and initially may be able to borrow 61 billion pounds in total under the plan.

Banks have curtailed lending since the financial crisis to strengthen balance sheets. The lack of credit supply has hurt Britain’s housing market. Mortgage approvals are still only about half the monthly average of 103,000 in the decade to 2007 before the financial crisis struck.

Prices declined 0.1 percent this month from September and 0.4 percent from a year earlier, London-based property research group Hometrack said in an e-mailed statement today. In a separate report, Rightmove Plc showed the proportion of people forecasting higher prices in 12 months rose to 29 percent from 22 percent a year ago.

A measure of M4 money-supply growth the bank uses to assess the effectiveness of its asset purchases slowed to 7.4 percent in the three months through September on an annualized basis, the central bank said. That compares with a 7.9 percent gain in the three months through August. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non-bank credit grantors.

Total M4 rose 0.2 percent in September from August and was down 3.5 percent from a year earlier, the Bank of England said.

To contact the reporters on this story: Scott Hamilton in London at shamilton8@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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