U.K. Mortgage Approvals Unexpectedly Fell in January, BOE Says
U.K. mortgage approvals unexpectedly declined in January, indicating continuing weakness in the housing market.
Lenders granted 54,719 mortgages, down from a revised 55,632 in December, the Bank of England said today in London. Economists had forecast an increase to 56,500, based on the median of 19 estimates in Bloomberg News survey, from an initially reported 55,785. Net mortgage lending rose by 147 million pounds ($223 million), the least since August.
Nationwide Building Society said today that the recovery in Britain’s property market is “likely to be gradual” as accelerating inflation squeezes consumers. Bank of England policy maker Paul Fisher said this week that he noted the “beginnings of a revival in mortgage activity” thanks to the central bank’s Funding for Lending Scheme, though the plan’s impact on credit growth remained uncertain.
“Approvals remain weak compared to long-term norms,” Howard Archer, an economist at IHS Global Insight in London, said before the data were released. “While we believe that the economy will pick up gradually as 2013 progresses, we doubt that growth will be fast enough for some time to come to provide significant support to the housing market.”
Separate BOE data today showed that overseas investors increased their holdings of U.K. government bonds for a seventh straight month in January. Non-residents bought 1.55 billion pounds more gilts than they sold, after increasing their holdings by 15.4 billion pounds in December.
While mortgage approvals have increased in recent months, they are still only about half the monthly average recorded in the decade to 2007, when the financial crisis struck. Nationwide, reporting a 0.2 percent increase in home values in February, said that while the “economic backdrop remains challenging, there are reasons for cautious optimism.”
Today’s Bank of England lending data showed that consumer credit rose by 446 million pounds in January, with credit-card lending increasing by 99 million pounds. Gross mortgage lending was 12.3 billion pounds.
In a separate report, the BOE said that U.K. money supply rose 0.9 percent in January from the previous month. From a year earlier, M4 fell 0.8 percent. That’s the smallest annual decline since August 2011.
A measure of M4 money-supply growth the central bank uses to assess the effectiveness of its asset purchases accelerated to a quarterly annualized 5.6 percent from 3.9 percent. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non- bank credit grantors.
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