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UK banks approve fewer mortgages as new tax weighs: BBA
[LONDON] The number of mortgages approved by British banks in March fell to its lowest number since December, hit by the approach of a higher tax on buy-to-let properties, industry figures showed.
British banks approved 45,096 mortgages for house purchases last month, down from 45,646 in February although the figure represented a 14 per cent increase compared with March 2015, the British Bankers' Association said.
The figures also showed a sharp increase in the gross value of loans for house purchases in March - up by nearly 4 billion pounds (S$7.33 billion) to 17.115 billion pounds - as previously approved mortgages were made.
Rebecca Harding, chief economic advisor at the BBA, said consumer credit was continuing to grow more quickly than inflation-adjusted earnings.
But borrowing by businesses moderated in some big sectors as companies turned to capital markets and built up deposits, she said in a statement.
On April 1, Britain introduced an extra tax on investors buying properties in order to rent them out as the government sought to address a shortage of homes for owner-occupiers.
Figures from the BBA and mortgage lenders showed an increase in demand after the tax was announced in November as investors sought to buy properties ahead of the new tax.
The BBA figures also showed that banks' net credit card lending rose by 358 million pounds in March, its biggest increase since November, while net lending for personal loans and overdrafts slowed to 95 million pounds.
The BBA figures do not include lending by mutually owned building societies, which accounts for around third of mortgages. The next release of the more comprehensive Bank of England lending data is due on Friday.
Tighter rules on mortgage lending in 2014 cooled the market but British house prices have started to rise more strongly again in recent months.
As well as the new tax on buy-to-let properties, the BoE said last month it would ask banks to make more stringent checks on landlords seeking mortgages.