U.K. Mortgage Approvals Fall to Lowest Level in Almost Two Years

  • Home-loan approvals drop to 60,058, weakest since Nov. 2014
  • Data showing mixed picture on housing market since Brexit vote

U.K. mortgage mortgage approvals fell to the lowest in almost two years in August, reflecting the mixed picture for the housing market since the Brexit vote.

Banks and building societies signed off on 60,058 home loans -- the fewest since November 2014 -- compared with 60,925 in July, the Bank of England said on Thursday. Economists had forecast 60,200, according to a Bloomberg News survey. Net lending was 2.9 billion pounds.

The report also showed that consumer spending remained strong last month, rising by a net 1.6 billion pounds, with annual growth of 10.3 percent. Along with June, that’s the fastest expansion in more than a decade.

While the housing market has been hit by stamp-duty changes and uncertainty since the vote to leave the European Union, record employment and low interest rates are supporting demand. The effective interest rate on new secured loans remained at 2.31 percent in August, the lowest since records began in 2004, the BOE said.

The credit data also showed lending to businesses fell in August by 415 million pounds, though it was up an annual 2.4 percent. Credit to small and medium-sized companies increased 1.6 percent year-on-year.

In a separate release, the BOE announced how it expects banks to test affordability for buy-to-let property investors. It wants lenders to take into account borrowers’ tax liabilities, verified personal income and possible future interest-rate increases.

The Prudential Regulation Authority said it will continue to monitor the investment property market in the U.K. and how the standards impact new lending.

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