U.K. mortgage approvals rose in July from an 18-month low the previous month when an extra public holiday slowed housing activity.
Lenders granted 47,312 loans to buy homes, compared with 44,124 in June, the Bank of England said today in London. Economists predicted approvals would rise to 47,000, based on the median of 16 estimates in Bloomberg News survey. The total remains below the average for the previous six months of 50,729.
House prices are under pressure as banks restrict lending and Britain’s economy struggles to recover from a recession. While the Bank of England and the Treasury are assessing the impact of their Funding for Lending Scheme, designed to boost credit to companies and households, a report by Hometrack Ltd. showed house prices fell in August for a second month.
“Mortgage activity remains very close to record low levels since early 2010, a sign that the housing market is struggling to improve,” said Annalisa Piazza, an analyst at Newedge Group in London. “It will take a few months to see the effects of the additional policy accommodation. Until then, we expect housing activity to remain very subdued.”
Net mortgage lending rose 1.13 billion pounds ($1.8 billion) in July from June, according to the Bank of England report. Net consumer credit fell 220 million pounds. The central bank has changed the consumer credit data and said it now excludes student loans.
Mortgage approvals are at less than half their monthly average in the decade to 2007, before the financial crisis struck. Hometrack said on Aug. 27 that home prices fell 0.1 percent this month amid a “fragile” market. In the year to date, demand for property has risen 10 percent, lagging behind a 19 percent surge in supply and adding to downward pressure on prices, it said.
The Bank of England also said today that M4 money supply rose 0.5 percent in July from the previous month and was down 4.6 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 at 5 percent in the three months through July on an annualized basis. That compares with 2.9 percent growth in the three months through June. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non-bank credit grantors.