UK mortgage approvals hit 5-month high in June: BoE

July 30, 2018

LONDON, July 30 (Reuters) – Britain’s housing market perked up last month as mortgage approvals hit a five-month high, according to Bank of England lending data on Monday.

The figures were broadly in line with expectations and are unlikely to change the debate around a BoE policy decision on Thursday, widely expected to result in an interest rate hike.

The BoE said British lenders approved 65,619 mortgages in June, up from 64,684 in May and close to the consensus of 65,500 in a Reuters poll of economists.

Monday’s figures also showed a stronger than expected increase in lending to consumers.

Most economists polled by Reuters think the BoE will raise rates to a new post-financial crisis high of 0.75 percent on Thursday. [BOE/INT]

The central bank believes inflation pressure is beginning to firm and that a slowdown in the economy in early 2018 was caused mostly by unusually cold winter weather.

But wage growth has failed to pick up much and some economists are concerned that domestically generated inflation pressure is actually weakening, which would make a rate hike unnecessary and even damaging to households.

Last week industry body UK Finance reported banks’ mortgage approvals for house purchase hit a nine-month high in June, according to seasonally adjusted figures.

Net mortgage lending rose by 3.851 billion pounds, while consumer lending increased by 1.567 billion pounds compared with a forecast rise of 1.3 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.

(Reporting by Andy Bruce and Jonathan Cable)

((uk.economics@reuters.com, +44 20 7542 5109))

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July 30, 2018 at 02:10PM
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