April 30 (Bloomberg) -- U.K. mortgage approvals rose more than forecast in March as an easing of credit conditions helped support the housing market.
Lenders granted 53,504 mortgages, compared with a revised 51,947 in February, the Bank of England said today in London. Economists had forecast an increase to 52,700 from an initially reported 51,653, based on the median of 18 estimates in Bloomberg News survey. Net mortgage lending rose 430 million pounds ($666 million), below the average of 600 million pounds over the previous six months.
The central bank said earlier this month that the availability of mortgages improved in the first quarter and may increase further in the current period after its Funding for Lending Scheme gave banks access to cheaper credit. Hometrack Ltd. said yesterday that improved sentiment and a shortage of properties for sale are supporting values, while new government measures will bolster confidence further.
“The BOE and Treasury are pulling out all the stops to boost the flow of credit, which for now is showing up in the housing market,” said Rob Wood, chief U.K. economist at Berenberg Bank in London. “The cost and availability of mortgage credit will continue to improve.”
The pound was little changed against the dollar and was trading at $1.5504 as of 10:40 a.m. London time, from $1.5500 yesterday. The yield on the 10-year U.K. government bond declined 1 basis point to 1.65 percent.
Gross mortgage lending fell to 12.5 billion pounds in March from 12.7 billion pounds in February, today’s report showed. Mortgage approvals are still only about half the monthly average in the decade to 2007, when the financial crisis struck.
The report also showed that consumer credit rose 493 million pounds in March, with credit-card lending increased 192 million pounds.
Separately today, GfK NOP Ltd. said U.K. consumer confidence declined one point to minus 27 in April as inflation above the BOE’s target squeezed households. A gauge of how consumers see their finances over the next year also fell.
Bank of England policy maker David Miles told the Belfast Telegraph newspaper in an interview published today that the squeeze on household incomes will ease. Inflation will “more likely than not” fall from March’s 2.8 percent and be close to the BOE’s 2 percent target “as we go into next year,” he said.
Separate BOE data today showed that overseas investors increased their holdings of U.K. government bonds for a ninth straight month in March. Non-residents bought 7.5 billion pounds more gilts than they sold, after increasing their holdings by 8.3 billion pounds in February.
The BOE also said that U.K. M4 money supply fell 0.9 percent in March from the previous month, the most since June. From a year earlier, M4 rose 0.3 percent.
A measure of M4 money-supply growth the central bank uses to assess the effectiveness of its asset purchases rose to a quarterly annualized 4.6 percent from 3.2 percent.
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