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UK mortgage approvals hit 15-month low in November

LONDON (Reuters) – British banks approved the fewest mortgages in 15 months in November, when the Bank of England raised interest rates for the first time in more than a decade, industry figures showed on Thursday.

Banks approved 39,507 mortgages for house purchase last month, down from 40,417 in October and 5 percent fewer than in November 2016, trade association UK Finance said.

At the start of the month, the Bank of England raised interest rates from a record low 0.25 percent to 0.5 percent.

“Housing market activity remains under pressure from squeezed consumer finances and fragile confidence, and it may well have taken a further dent in November from the Bank of England lifting interest rates,” Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

A Reuters poll of economists last week suggested British house prices will rise little more than 1 percent next year, with those in London set to fall for the first in eight years.

Last month, finance minister Philip Hammond sought to offer voters some relief with spending plans that focused on housing, including scrapping a property purchase tax for most first-time home-buyers.

“Even if successful, (Hammond‘s) measures to boost house building in November’s budget will take time to have a significant effect so are unlikely to markedly influence house prices in the near term at least,” Archer said.

More comprehensive lending figures from the Bank of England are due next Thursday.

Source: UK Reuters

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UK mortgage approvals edge lower, consumer lending robust

LONDON, (Reuters) – Britain’s housing market and consumer economy kept most of their momentum last month, lending figures from the Bank of England showed on Monday, leaving the central bank on track to raise interest rates for the first time in more than a decade on Thursday.

The number of mortgages approved for house purchase fell to a three-month low in September at 66,232 from an upwardly revised 67,232 in August, slightly above economists’ average forecast for it to slip to 66,050 in a Reuters poll.

The growth rate in unsecured consumer lending nudged down to 9.9 percent on a year-on-year basis in September from 10.0 percent in August, matching July’s growth.

In cash terms, net consumer lending rose by 1.606 billion pounds last month, a fraction above the highest forecast in a Reuters poll.

Last month the BoE said British lenders needed to hold an extra 10 billion pounds of capital to guard against consumer loans going sour, as it was concerned that banks had overestimated the creditworthiness of their borrowers.

Government data on Friday showed that personal insolvencies rose to a five-year high in the third quarter.

Official data last week showed an unexpected pick-up in gross domestic product growth to a quarterly rate of 0.4 percent in the third quarter – still well below its long-run trend, but an improvement after the weakest first half since 2012.

Moreover, with inflation at a five-year high of 3.0 percent and unemployment at its lowest in more than 40 years, the BoE looks on track to raise interest rates on Thursday for the first time since 2007, reversing a rate cut made in August 2016.

The initial impact of raising rates back to 0.5 percent – their level for seven years until August 2016’s rate cut – may be muted for most Britons.

Less than 30 percent of households have mortgages, and 60 percent of these are fixed-rate, compared with just 30 percent 15 years ago. For the average borrower with a variable rate mortgage, interest payments will rise by 180 pounds ($237) a year if rates return to 0.5 percent, according to mortgage lender Nationwide.

Mortgage lending, which lags behind approvals, rose by 3.848 billion pounds in September and is 3.2 percent higher on the year. Mortgage and consumer lending combined is up 4.0 percent.

Britain’s housing market has slowed since June 2016’s vote to leave the European Union, especially in London and neighbouring parts of England.