UK mortgage approvals edge higher in September, BoE data reveals

Mortgage approvals in Britain rose more than expected in September as the housing market remained resilient following the Brexit vote, Bank of England data revealed on Monday.

The number of mortgage approvals for house purchases increased to 62,932 in September from 60,984 in August, the highest since June and above the forecast for 61,500 approvals.

However, compared to the same month a year ago, mortgage approvals were down 9.6%. Housing market activity has slowed since an increase in stamp duty on second homes and buy-to-let properties in April. Uncertainty surrounding the Brexit vote has also deterred some prospective house buyers.

“On the positive side, pretty solid fundamentals for house buyers - high employment, decent purchasing power and very low mortgage rates – have remained a source of support for the housing market while a shortage of properties has also supported house prices,” said Howard Archer, chief UK and European economist at IHS Global Insight.

The BOE data also showed consumer lending growth slowed and missed estimates. It rose by £1.405bn in September compared to forecasts of £1.5bn and the previous month’s £1.635bn increase.

“It could be that consumers became a bit more cautious over borrowing in September or it could just be that they took a bit of a breather after largely spending at a rapid rate over the summer,” Archer said.

“In actual fact, consumer confidence improved in September and recovered all of the sharp losses seen in the immediate aftermath of June’s Brexit vote – in fact, consumers had been prepared to borrow and spend at a very strong rate in July despite the plunge in confidence reported by GfK.”

GfK last week reported that its consumer confidence index recovered to -1 in September from -7 in August and -12 in July. It had fallen to -12 in July from -1 in June

Archer added: “The fundamentals for consumers remained largely healthy during the third quarter with employment at a record high and purchasing power benefiting from earnings growth still running well above consumer price inflation.”