U.K. mortgage approvals rose in April as record-low interest rates helped sustain some property demand during the seasonal spring buying period.
Lenders granted 51,823 loans to buy homes, compared with a revised 51,067 the previous month, the Bank of England said today in London. Economists forecast that approvals would gain to 50,100 from an initially reported 49,860 in March, based on the median forecast of 20 economists in Bloomberg survey. The April total is still about half the monthly average in the decade to 2007 before the financial crisis struck.
Property research company Hometrack Ltd. said this week that the housing market may remain under pressure as rising unemployment and concerns about the euro area undermine consumer confidence. In a sign of caution among Britons, today’s report showed that net lending on credit cards plunged the most in almost six years in April.
“Mortgage approvals are very low compared to long-term norms,” Howard Archer, an economist at IHS Global Insight in London, said before the data were released. “Serious worries over the situation in Greece and how this could hit the U.K. economy may well lead to increased caution over buying a house and damp prices.”
Net mortgage lending increased by 1.14 billion pounds ($1.78 billion) in April from March, today’s report showed. The Bank of England held its benchmark interest rate at 0.5 percent this month, when it also decided to stop expanding its stimulus program.
The April mortgage approvals total compares with 58,610 in January, when the property market received a boost as first-time buyers took advantage of a tax exemption on purchases of some homes before it ended in March. Hometrack said this week that while house prices rose 0.2 percent in May, economic concerns will probably keep demand and prices “in check” this year.
Net consumer credit rose by 268 million pounds in April, while credit card lending fell by a net 118 million pounds, the most since August 2006, the Bank of England said.
In a separate report, the central bank said M4 money supply rose 1.1 percent in April from the previous month and was down 3.8 percent from a year earlier.
A measure of M4 money-supply growth the central bank uses to assess the effectiveness of its asset purchases was up 3.8 percent in the three months through April on an annualized basis, the central bank said. That compares with 7.1 percent in the three months through March. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non-bank credit grantors.