UK mortgage approvals hit 13-year high-consumer lending slides

02-11-2020

British lenders approved the highest number of mortgages since September 2007 last month, unexpectedly extending a post-lockdown surge, but there was a record drop in unsecured lending to consumers, Bank of England data showed on Thursday.

Mortgage approvals for house purchase jumped to 91,454 in September from August’s already-high reading of 85,530, exceeding all forecasts in a Reuters poll of economists that had instead pointed to a decline.

Activity in Britain’s housing market has rebounded sharply since the end of lockdown restrictions and was further fuelled when finance minister Rishi Sunak temporarily suspended property purchase taxes in July.

Earlier this month, mortgage lender Halifax reported a 7.3% annual rise in house prices for September, the biggest increase since 2016.

The rapid rebound in the property market contrasts with a gloomier picture for many other parts of Britain’s economy, which shrank by 20% in the three months to June. Output in August was still 9% lower than before the pandemic.

The housing market pick-up is likely to fade, Andrew Montlake, managing director of mortgage broker Coreco, said.

“The post-lockdown bull run is already over,” he said. Lenders have been pulling down the shutters due to ongoing struggles with capacity and concerns over rising unemployment levels, specifically the impact on house price growth.”

Headwinds to the British economy are mounting with a sharp rise in the number of coronavirus cases through September and October, and the risk of higher unemployment as government job support is steadily scaled back.

Unsecured lending to consumers in September was 4.6% lower than a year earlier, the sharpest annual drop since 1994 when the BoE started collecting these figures on a monthly basis.

Source: UK Reuters