U.K. Mortgage Approvals Little Changed in April, BOE Says

U.K. mortgage approvals were little changed in April, highlighting the challenge policy makers face as they try to stoke lending.

Lenders granted 53,710 home loans compared with a revised 53,674 in March, the Bank of England said today in London. Economists had forecast an increase to 54,600 in April from an initially reported 53,504, according to the median of 21 estimates in Bloomberg News survey.

House prices had their biggest annual increase in 18 months in May as the BOE’s Funding for Lending Scheme eased access to mortgages, Nationwide Building Society said yesterday. Still, approvals are only about half the monthly average in the decade to 2007, when the financial crisis struck, and the central bank has maintained monetary stimulus to cement the economic recovery.

“House prices are likely to achieve a moderate gain of a few percent or so over 2013, helped by modestly improved activity,” Howard Archer, an economist at IHS Global Insight, said in a research note. “A decisive upward move in house prices seems unlikely given an ongoing challenging and uncertain economic environment.”

Separate BOE data today showed that overseas investors sold their holdings of U.K. government bonds for the first time in 10 months in April. Non-residents sold 3.86 billion pounds ($5.9 billion) more gilts than they bought.

The pound remained lower against the dollar after the data. It was at $1.5200 as of 9:32 a.m. London time, down 0.2 percent from yesterday.

Mortgage Lending

Net mortgage lending rose by 875 million pounds ($1.33 billion) in April from the previous month, according to the BOE credit data. Gross mortgage lending was 13 billion pounds, up from 12.7 billion pounds.

U.K. house prices rose 1.1 percent from a year earlier in May, according to Nationwide. They climbed 0.4 percent from the previous month to an average 167,912 pounds.

In April, the central bank extended the FLS, designed to provide cheaper loans to consumers and companies by lowering banks’ funding costs, by one year to January 2015. Officials held their bond-purchase plan at 375 billion pounds this month and their key interest rate at a record low of 0.5 percent. Their next policy decision is June 6.

Today’s BOE data showed that consumer credit increased by 524 million pounds in April, with credit-card lending rising 102 million pounds.

The BOE also said that U.K. M4 money supply rose 0.3 percent in April from the previous month. From a year earlier, M4 slipped 0.1 percent.

A separate measure of M4 money-supply growth the central bank uses to assess the effectiveness of its asset purchases slowed to a quarterly annualized 2.8 percent from 4.7 percent, the least since June 2012.

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