The number of new mortgages approved in Britain fell in September to the lowest level in 14 months, the latest sign that the UK housing market is cooling.
There were 61,267 new home loans approved during the month, down from 64,054 in August, the Bank of England said Wednesday. New approvals have come down since January, when they hit a six-year high of 76,295. It also confirms a similar trend this year illustrated by figures released by the British Bankers' Association last week.
Total mortgage lending, net of repayments, increased by £1.8 billion ($US2.9 billion), down from August and the lowest value since January, according to the Bank of England.
Mortgage lending has been cooling since April, when stricter regulations for lenders came into effect to address concerns from regulators. The bank's governor, Mark Carney, said in June that real estate was "the greatest risk to the domestic economy." The fact that mortgage volumes are still dipping is easing fears of rising house prices turning into an asset bubble, economists say, as it shows the market has slowed even after banks have come to grips with the new procedures.
Indeed, surveys such as the monthly poll by the Royal Institution of Chartered Surveyors released earlier this month confirm that September was the third month in a row of declining demand for house purchasing by British people. This caused house prices to plateau: An index by UK mortgage lender Nationwide showed a small month-on-month decline in September and analysts expect growth to continue at a slower pace during the rest of the year.
Lending to UK businesses has also declined, the BOE said. Loans to nonfinancial businesses fell in September by a net £0.7 billion, compared with a rise of £0.9 billion in August.
The central bank said earlier this month that most of the lending was used by large companies who were taking advantage of record-low interest rates to refinance their debt. In September, the BOE said, the effective rate that non-financial companies pay on their time deposits fell again.
Also during the month, overall net consumer borrowing rose £2.7 billion, compared with an increase of £3.2 billion a month earlier. Despite remaining strong, it is the lowest increase since February this year, following a small dip in consumer confidence and retail sales.
Consumer spending has been a main driver of the British economy during the year, but analysts fear the lack of a pickup in wages -- still falling when accounting for inflation -- could drive Britons to keep stronger tabs on their wallets.
BoE data shows lending at lowest level since January, eases bubble fears.
Published