U.K. Mortgage Lending Surges Most Since the Financial Crisisby and
Property-loan approvals rise to highest level since early 2014
Business lending to SMEs also shows signs of a pickup
U.K. mortgage lending rose in August by the most since before the financial crisis in 2008 as an improving economy and low interest rates fueled demand.
Net lending on property jumped 3.4 billion pounds, the biggest increase since May 2008, the Bank of England said in London on Tuesday. Mortgage approvals increased to 71,030, the highest since January 2014. Economists had forecast a reading of 69,800, according to a Bloomberg survey.
The data add to evidence that the housing market is strengthening, with asking prices for U.K. homes reaching records nationally in September, according to property website operator Rightmove Plc. The BOE’s Financial Policy Committee said last week it expects the pickup to continue, though it said this isn’t currently undermining financial stability.
Gross mortgage lending rose to 19.1 billion pounds in August, the most since July 2008, according to the central bank data. Repayments amounted to 15.6 billion pounds. The value of mortgages approved also reached the highest since 2008.
Accelerating wage growth, weak inflation and low borrowing costs are boosting housing demand in the U.K. The effective interest rate on two-year mortgages with a 25 percent deposit was at 1.95 percent in August. While that’s up from 1.87 percent in July, it compares with more than 2.5 percent a year ago.
The BOE report also showed that lending to businesses rose by 2 billion pounds in August. Loans to small and medium-sized companies increased by 284 million pounds. From a year earlier, SME lending was unchanged, the first time it hasn’t fallen since the data began in April 2012.
M4, a broad measure of money supply, fell 0.4 percent from the previous month and was down 0.1 percent from a year earlier. An underlying measure of M4 -- excluding so-called intermediate and other financial corporations -- was at 2.2 percent on a three-month annualized basis, the weakest since January 2012.