UK lenders approve fewest mortgages since January

BRITISH lenders approved the fewest numbers of mortgages since January last month and consumer credit expanded at the weakest pace in nearly a year, as high interest rates continued to weigh on borrowers, Bank of England (BOE) data showed on Monday (Jul 29).

Lenders approved 59,976 mortgages for house purchase in June, the BOE said, down fractionally from an upwardly revised reading of 60,134 in May and below the median forecast of a small rise to 60,400 in a Reuters poll of economists.

Mortgage rates have been starting to come down as investors increasingly expect the BOE to cut its interest rate from a 16-year high, possibly as soon as Thursday, but this has not yet spurred an increase in purchases.

“Affordability has been a major obstacle for first-time buyers over the past couple of years,” said Alice Haines, personal finance analyst at online investment platform Bestinvest.

“The toxic combination of high inflation, high borrowing costs and falling real wages made it significantly harder for movers to secure the properties they wanted,” she said.

House prices rose 2.2 per cent in the 12 months to May, less than the rate of consumer price inflation over the period, according to official figures.

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Consumer credit grew at an annual rate of 8 per cent, the slowest since August 2023, after a net monthly increase of £1.16 billion pounds (S$2 billion), below the increase of £1.25 billion pounds forecast by economists.

However, there was a stronger-than-expected increase in the sum of money advanced for mortgages, which rose by a net £2.65 billion pounds in June, double forecasts and May’s reading. REUTERS