U.K. Mortgage Approvals Rise as Housing Demand Strengthensby
Net lending rises 3.6 billion pounds, most in seven years
Business lending stops falling on a year-on-year measure
U.K. mortgage approvals rose in October, indicating continued robust demand in the housing market.
Approvals increased to 69,630 from 69,012 in September, the Bank of England said on Monday. Economists had forecast a reading of 69,900, according to a Bloomberg survey. Net lending rose 3.63 billion pounds ($5.5 billion), the most since April 2008.
The latest data come a day before the Bank of England publishes its Financial Stability Review, outlining potential threats to the economy, including the pace of lending, property-market growth and consumer-debt levels. Officials have highlighted risks from the buy-to-let market and are reviewing whether to apply an additional capital buffer on banks.
The number of approvals was above the average over the previous six months, according to the BOE. In August, they reached 70,700, the highest in more than a year and a half.
Record-low interest rates are helping to support demand for housing. The effective interest rate on new secured loans fell 5 basis points to 2.52 percent in October. The rate on outstanding mortgages was 3.03 percent.
The BOE report also showed improvement in business lending, with loans to companies rising 2.3 billion pounds in October. Lending has stopped falling on an annual basis for the first time since the series began in 2012. Loans to small and medium-sized companies increased 443 million pounds.
The U.K. Treasury and the BOE said on Monday that they are extending a program aimed at boosting lending to companies for two years. Banks will now be able to access the Funding for Lending Scheme -- intended to cut borrowing costs for firms -- until January 2018. They said the extra time will allow the FLS to be gradually phased out to minimize risks to the economy.
M4, a broad measure of money supply, increased 0.6 percent from the previous month and was up 0.2 percent from a year earlier. The BOE also said foreign purchases of gilts rose a net 18.2 billion pounds in October, a record increase.