UK housing market slows in February as mortgage approvals slide

LONDON (Reuters) – Britain’s housing market slowed in February as lenders approved fewer mortgages than expected, Bank of England figures showed on Thursday.

A row of houses are seen in London, Britain June 3, 2015. British house prices rose at their slowest annual rate in nearly two years in May, as growth continued to moderate after double-digit increases in the middle of 2014, figures from mortgage lender Nationwide showed on Wednesday. REUTERS/Suzanne Plunkett

Britain’s economy grew more slowly on an annual basis than all other G7 countries in the final three months of last year, after consumers were hurt by higher inflation caused by the pound’s fall after the Brexit vote in June 2016.

The housing market has also been sluggish – especially in London and surrounding areas – and earlier on Thursday mortgage lender Nationwide said annual house price growth cooled to a seven-month low in March.

The BoE said the number of mortgages approved for house purchase fell to 63,910 in February from 67,110 in January, below economists’ forecasts of a smaller drop to 66,000 in a Reuters poll.

The central bank raised rates for the first time since 2007 in November, reversing a cut made in August 2016, and last month said rates would probably need to rise sooner and by slightly more than it had thought before.

Economists polled by Reuters expect the BoE to raise rates to a new post-financial crisis high of 0.75 percent from 0.5 percent by May.

Figures earlier this week from industry group UK Finance showed the number of mortgages approved by British banks during February fell by 11 percent compared with the same month last year after rising for the first time in four months in January.

In November British finance minister Philip Hammond cut a tax on property purchases for first-time buyers in an attempt to help younger people get into the property market.

While the housing market has slowed over the last year, there were tentative signs that the mood among consumers brightened a little in early 2018.

The BoE data showed the growth rate in unsecured consumer lending picked up slightly to 9.4 percent in the year to February from January’s 9.3 percent.

And earlier on Thursday market research firm GfK said consumer confidence in Britain increased sharply in March.

Consumer lending in cash terms increased by 1.647 billion pounds, topping all predictions in a Reuters poll that had pointed to a rise of 1.4 billion pounds.

Consumer credit growth has been slowing gradually since it peaked at nearly 11 percent in January 2016.

The BoE has played down any suggestion of a debt bubble, though it has acknowledged pockets of risk and required banks to set aside more money against the risk of bad loans.

Let’s block ads! (Why?)

Reuters: Money