U.K. Mortgage Approvals Fall to Lowest Level in More Than a Year

U.K. mortgage approvals fell to the lowest in more than a year in October, adding to signs the property market is cooling.

Approvals declined to 59,426, the lowest since June 2013, from 61,234 in September, the Bank of England said in London today. The median forecast of economists in a Bloomberg News survey was a reading of 59,000. Net lending on homes rose 1.5 billion, the least in 11 months.

Britain’s housing market has lost momentum in recent months after the BOE introduced new curbs on risky lending and warned of the threat of a property bubble. The central bank’s Monetary Policy Committee will keep the key interest rate at a record-low 0.5 percent this week as the economy battles headwinds from the euro-area.

The BOE report showed that the effective interest rate on new mortgages fell to 3.18 percent in October from 3.22 percent in September. The rate on outstanding secured loans dropped to 3.19 percent, the lowest since the series began in 1999, from 3.20 percent.

Nationwide Building Society said last week that U.K. house price growth slowed in November as demand for property continued to weaken. Annual price gains cooled to 8.5 percent from 9 percent in October. That’s the smallest increase in 11 months.

Today’s report showed that business lending fell 1.9 billion pounds in October from September, more than the 400 million-pound average decline over the previous six months. Lending was down 3.2 percent from a year earlier. Loans to small and medium-sized companies dropped an annual 2.1 percent, the BOE said. Consumer credit rose 1.1 billion pounds in October.

M4 money supply fell 0.1 percent in October from the previous month and dropped 2.6 percent from a year earlier, the biggest annual drop in two years. A measure of M4 excluding intermediate OFCs rose an annualized 2.5 percent in the three months through October.

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