UK lenders approve most mortgages since June as interest rates fall
LONDON (Reuters) -British lenders last month approved the most mortgages since June, Bank of England data showed on Tuesday, adding to signs that the squeeze on property transactions from high interest rates is easing.
The BoE said 50,459 mortgages for house purchase were approved in December, below economists’ forecast of 52,500 in a Reuters poll but up from 49,313 in November.
“While the drag from high interest rates will continue to feed through to existing borrowers, the further fall in rates for new mortgages in January will probably continue to increase new borrowing,” Ashley Webb, an economist at consultancy Capital Economics, said.
“This lends some support to our view that the economic recovery will start later this year.”
The BoE raised interest rates last August to 5.25%, their highest since 2008. Financial markets and economists expect rate cuts from May or June this year, pushing down on the cost of two-year fixed-rate mortgages favoured by British house buyers.
The BoE said the average interest rate for new mortgages dropped last month for the first time since November 2021, falling by 0.06 percentage points to 5.28%.
The central bank will set out its latest inflation and growth forecasts and outlook for monetary policy on Thursday.
The BoE data showed an 830 million-pound ($1.05 billion) fall in net mortgage lending in December, in sharp contrast to the 250 million-pound rise forecast in a Reuters poll.
Unsecured consumer lending rose by 1.197 billion pounds, less than in November and slightly less than economists had forecast.
($1 = 0.7890 pounds)
(Reporting by David Milliken; editing by William Schomberg)
