U.K. Mortgage Approvals Rise in May as BOE Holds Bond Stimulus in Place
U.K. mortgage approvals rose in May as the Bank of England kept its 200 billion-pound ($297 billion) bond stimulus in place to help stoke lending in the economy, preliminary data from the bank showed.
The number of loans granted was 51,000, compared with 48,000 in April, according to a sample from the central bank’s panel of six major lenders released in London today. The Council of Mortgage Lenders said in a separate report that the U.K. housing market remains “subdued.”
While mortgage approvals have stabilized as the U.K. economy resumed expansion, they are still at half the level they were at the peak of the housing boom as banks curtail lending in the wake of the credit crisis. House-price growth is being supported by a lack of properties for sale. The Royal Institution for Chartered Surveyors said on June 15 that a home- price gauge climbed to a four-month high in May.
“Looking forward, lenders expected mortgage market activity to remain broadly flat in the coming months,” the Bank of England said. “Demand for housing, especially among first- time buyers, continued to be constrained by tight credit conditions.”
The Council of Mortgage Lenders said in its report that gross mortgage lending totalled an estimated 11.3 billion pounds in May, up 7 percent from the previous month. The group said earlier this week that credit availability “remains problematic for first-time buyers who tend not to have a substantial deposit.”
Home buying may also be curbed as consumers await the outcome of the government’s emergency budget on June 22, aimed at reducing a record deficit. Bellway Plc, a U.K. homebuilder specializing in first-time buyers, sold 13 percent fewer homes in the four weeks following the U.K. election on May 6 as concerns about possible spending cuts and tax increases deterred purchasers, Finance Director Alistair Leitch said on June 15.
Figures today showed Britain had a smaller fiscal deficit than economists forecast in May as growth lifted tax receipts, providing a boost for finance minister George Osborne. The pound remained higher against the dollar after the reports and was up 0.3 percent to $1.4874 as of 9:40 a.m. in London.
Separate data from the Bank of England today showed that M4, the broadest measure of money supply, was unchanged in May from the previous month. From a year earlier, M4 growth was 2.8 percent, down from 3.2 percent in April and the lowest since April 1993.
Measures of expansion in money supply, earnings and spending in the U.K. are “significantly lower than the average growth rates recorded before the crisis,” Bank of England Governor Mervyn King said on June 16.
The mortgage-approvals data published today is based on reports from Banco Santander SA, Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc, Nationwide Building Society and Royal Bank of Scotland Group Plc.
To contact the reporter on this story: Scott Hamilton in London at email@example.com