Saturday, 26 February 2011
U.K. Mortgage Lending Picks Up
Net mortgage lending rose by £1.6 billion in January, higher than December's gain of £0.9 billion. The number of remortgage approvals increased to 26,109 in January from 24,946 in December. However, mortgage approvals, a good forward-looking indicator of activity and prices, increased only slightly to 28,932 in January from 28,907 the previous month.
In a further blow for the housing market, the prospect that the Bank of England will soon raise interest rates strengthened Wednesday after minutes of the bank's February policy meeting revealed that three of the board's nine members voted for a rise.
"Any early interest rate hike would be bad news for the housing market and likely to weigh down on prices—not just the rate rise itself but also the impact on potential house buyers' psychology resulting from the fact that they would be facing rising interest rates with the prospect of more to come," Howard Archer, chief European and U.K. economist at IHS Global Insight, said
Paul Diggle, property economist at Capital Economics, said the increased likelihood of a near-term rate rise meant remortgaging could receive a temporary boost, as existing borrowers rush to take out fixed rates.
Wednesday's data also showed that lending to nonfinancial companies fell by £300 million in January compared to a fall of £3.4 billion in December.
The BBA—a trade association for the U.K. banking and financial services sector—said in both company finance and unsecured borrowing the emphasis is on repayment rather than new borrowing.
"This is a reflection of current very low consumer confidence and is the consequence of an uncertain and somewhat worrying longer-term outlook for the economy and jobs as the major fiscal squeeze increasingly kicks in over the coming months. Meanwhile, there remains limited availability of unsecured credit from banks," Mr. Archer said.
Posted by IMS Instant Pay at 14:14