BoE: Mortgage approvals ‘fizzling out’

Approvals for home loans fell unexpectedly in February to their lowest in eight months, official data showed on Thursday, suggesting a recent modest pick-up in the housing market is fizzling out.

Figures from the Bank of England showed net mortgage lending eased, while unsecured consumer credit picked up.

Source: Reuters

The central bank said mortgage approvals numbered 48,986 in February, down from 57,899 in January. That was more than 10,000 below analysts' expectations and is further evidence that a recent rebound in house prices may be nearing an end.

The figures come after mortgage lender Nationwide said that house prices fell 1 percent in March, their biggest drop in two years, with prices down 0.9 percent on the year, the sharpest annual decline in 9 months.

British consumers have been wary of borrowing at a time of economic uncertainty, high unemployment and government austerity measures.

However, a separate survey by the Bank of England showed banks expect demand for home loans to increase in the second quarter of this year.

Consumer credit rose by 0.4 billion pounds in February and net mortgage lending eased to 1.2 from 1.6 billion pounds. Analysts had predicted a 0.2 billion pounds rise in consumer credit and a 1.4 billion pounds rise in net mortgage lending.

The BoE's preferred gauge of money supply, M4 excluding intermediate other financial corporations, fell 0.4 percent on the month after a 1.8 percent rise in January.