UK mortgage approvals declined to the lowest since mid-2020 in April as rising interest rate and cost of living weighed on the housing market activity, data from the Bank of England showed on Tuesday.
Mortgage approvals for house purchases decreased to 66,000 in April from 69,500 in March. This was the lowest since June 2020 and slightly below the twelve-month pre-pandemic average up to February 2020 and the expected level of 69,000.
Secured lending fell to GBP 4.1 billion from GBP 6.4 billion in March. This was also slightly below the pre-pandemic average of GBP 4.3 billion in the twelve months up to February 2020.
Meanwhile, gross lending rose slightly to GBP 26.5 billion in April from GBP 26.2 billion in March.
Consumers borrowed an additional GBP 1.4 billion in consumer credit, of which GBP 0.7 billion was new lending on credit cards. The expected level of consumer credit was GBP 1.2 billion.
The solid rise in unsecured borrowing in April suggests that households have turned to credit to support their spending as the cost of living squeeze has intensified, Nicholas Farr, an economist at Capital Economics, said.
But consumers do not yet appear to be drawing on the large stock of savings they built up during the pandemic, increasing the likelihood that consumer spending falls by more in the second quarter than the 0.2 percent sequential drop that currently expected, added Farr.
Data showed that large non-financial businesses’ borrowing from banks rose to GBP 2.7 billion in April from GBP 1.8 billion in March, while small and medium sized businesses repaid GBP 0.5 billion of bank loans.
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