Photographer: Chris Ratcliffe/Bloomberg

U.K. Mortgage Approvals Increase Amid Buoyant Housing Market

  • Approvals climbed to 70,837 from 70,424 in November, BOE says
  • Low interest rates, record employment fueling housing demand

U.K. mortgage approvals unexpectedly rose in December, indicating the housing market maintained its momentum going into 2016.

Approvals climbed to 70,837 from 70,424 in November, the Bank of England said on Monday. Economists had forecast a decline to 69,600, according to a Bloomberg News survey. Net mortgage lending was 3.2 billion pounds ($4.6 billion), down from 3.8 billion pounds the previous month.

The figures add to evidence of a buoyant housing market, with low interest rates and record employment fueling demand that’s unmatched by new supply. The effective interest rate on new secured loans was unchanged at 2.55 percent in December. The rate on outstanding mortgages declined 2 basis points to 2.99 percent.

Net lending to consumers declined to 1.2 billion pounds from 1.5 billion pounds in November, the BOE report shows.

Business lending fell 3.7 billion pounds, with loans to smaller companies declining 299 million pounds, the biggest drop since December 2014.

M4, a broad measure of money supply, fell 0.2 percent from the previous month and was up 0.2 percent from a year earlier. An underlying measure of M4 slowed to growth of 4 percent on a 3-month annualized basis from 6.2 percent.

The BOE also said overseas investors sold a net 1.7 billion pounds of gilts in December compared with a net purchase of 13 billion pounds in November.

A separate report Monday showed an index of U.K. manufacturing unexpectedly rose in January as domestic demand offset the weakest export performance in seven months. The pound was little changed after the data at $1.4305, up 0.4 percent from Friday.

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