UK mortgage approvals fall to five-month low ahead of budget

[LONDON] UK demand for home loans dipped to the lowest level in five months, as aspiring buyers sat on the sidelines in the run-up to Labour’s tax-raising budget.

The number of mortgage approvals fell to 64,530 in November, down from 65,010 the month before, the Bank of England said on Monday (Jan 5). The figure – the weakest since June – was nonetheless higher than the 64,000 expected by economists.

Chancellor of the Exchequer Rachel Reeves announced a new levy on homes worth more than £2 million (S$3.46 million), which make up a small fraction of the UK’s total housing stock, at the fiscal event on Nov 26. The government also lifted taxes by £26 billion, although most of the impact will start to be felt years down the line.

The BOE figures add to evidence that pre-budget speculation exerted a modest drag on the housing market. A separate report from Nationwide Building Society last week showed house prices posted an unexpected drop in December.

Separate data show consumers borrowed an extra £2.1 billion of unsecured debt in November, the highest figure for two years and double market expectations. The jump was driven by borrowing on credit cards, which rose by £300 million to £1 billion. BLOOMBERG