UK banks approve fewer mortgages, new tax still fuelling demand: BBA

[LONDON] British banks approved fewer mortgages in February than in January, when they hit a nearly two-year high, but demand was pushed up again by the approach of a higher tax on buy-to-let properties, industry figures showed.

British banks approved 45,892 mortgages for house purchases last month, down from 46,916 in January but 20 per cent higher than in February 2015, the British Bankers' Association said.

"Mortgage borrowing remained buoyant in February. It appears that borrowers are continuing to try to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect next month," BBA chief economist Richard Woolhouse said. "Consumer confidence is also robust. Households are increasingly taking advantage of low interest rates by taking on more unsecured borrowing."

Finance minister George Osborne announced in November that investors buying properties in order to rent them out would have to pay an extra tax from April as the government sought to address a shortage of homes for owner-occupiers.

The BBA figures also showed that banks' net credit card lending rose by 31 million pounds, a slower increase than in January, while lending for personal loans and overdrafts picked up speed, rising by a net 340 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 March 31.

British house prices have started to rise more strongly again in recent months after the introduction of tighter rules on mortgage lending in 2014 cooled the market.

The BoE is due to publish details of its latest work on buy-to-let mortgage underwriting standards on March 29. It might make recommendations for regulators to follow although it has asked for powers to directly intervene in the market.

REUTERS