UK Mortgage Approvals Hit Lowest Since June 2020
The number of mortgages approved by lenders in Britain fell in October to its lowest since June 2020, soon after the onset of the COVID-19 pandemic, according to Bank of England data that underscores a sharp housing slowdown underway. Lenders approved 58,977 mortgages for house purchase last month, down from 65,967 in September. Britain's housing market is showing clear signs of slowing, with various gauges of house prices now showing cooling inflation after rapid growth during the pandemic. House prices were forecast to drop around 5% next year, having risen about 24% since early 2020, according to official data. BoE data showed the net increase in mortgage lending in October was smaller than expected at 3.966 billion pounds ($4.75 billion), down sharply from 5.878 billion pounds in September and marking the lowest reading since November 2021. Consumer borrowing increased in net terms by 769 million pounds in October, picking up slightly from September's 608 mn pounds rise. "October's money and credit figures reveal further signs that households continue to remain cautious and higher interest rates are starting to weigh on the economy," Ashley Webb, UK Economist at Consultancy Capital Economics, said. Mortgage interest costs soared and many lenders temporarily stopped issuing loans after former Prime Minister Liz Truss's unfunded package of tax cuts in September caused a fire sale of assets by pension funds that forced the Bank of England to stabilise the market. Although Truss reversed many of her tax cut measures and sacked her finance minister, Kwasi Kwarteng, it proved too little to keep her in office and she was succeeded by Rishi Sunak as Prime Minister. The BoE said loans to businesses outside the financial sector - while a volatile data series - contracted in net terms by 7.348 billion pounds, the sharpest drop since mid-2020 when the first COVID lockdown sent economic activity into freefall. Some 5.579 bn pounds of this drop comprised lending to large businesses. Excluding sharp moves around the height of the COVID-19 pandemic, it was the biggest drop on record.
Tags : mortgages lenders Britain Bank of England housing market