UK Mortgage Approvals Beat Consensus – But Don’t Dent Fears of Post-Brexit Slowdown
- UK mortgage approvals climb in September after previous month’s 19-month low
- But the figures are still down still down 15% from a year earlier
- Rising inflation points to prolonged weakness in mortgage lending
UK mortgage approvals in September picked up from a 19-month low the previous month, according to data from the British Banking Association. However, the group warned the housing market continues to show signs of underlying weakness owing to the UK’s decision to leave the EU.
The BBA reported that the number of mortgage approvals for house purchases rose to 38,252 last month, up from 37,241 in August, which was the lowest level since January 2015. Analysts had expected a rise to 37,400.
The UK housing market stabilized after Brexit, but will still run out of steam
The mortgage approvals figures today follow positive housing market data from the Royal Institution of Chartered Surveyors, which two weeks ago reported that the UK’s post-Brexit property market was picking up. RICS said demand in September rose for the first time since February, with 8% more chartered surveyors reporting an increase in buyer enquiries compared to a 5% drop in July: the month following the Brexit vote.
Nevertheless, September’s mortgage approvals from the BBA are still down 15% from a year earlier; and economists still fear that rising inflation and a slowdown in hiring will hit consumer spending when the UK triggers Article 50 by the end of March 2017, formally launching the separation process from the EU. This will put pressure on the UK property market next year.
That said, historically low mortgage rates, helped after the Bank of England cut rates in August, and fewer properties for sale may well help prop up prices. The weaker Sterling also makes UK property more attractive for overseas.
Looking ahead, remember that the BBA figures are not as closely watched as the BoE’s mortgage approval numbers which will be released on Monday, October 31.
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