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UK consumer lending growth slows to new three-year low, mortgage approvals jump

UK consumer lending growth slows to new three-year low, mortgage approvals jump
FILE PHOTO: A British Airways Airbus A320-200 passes over homes in Myrtle Avenue as it comes into land at Heathrow Airport, London, Britain January 10, 2018. REUTERS/Matthew Childs   -  
Matthew Childs(Reuters)
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LONDON, Nov 29 – Lending to British consumers slowed again last month to its weakest rate in more than three years, but there was a pick-up in the housing market with a jump in mortgage approvals, Bank of England data showed on Thursday.

The BoE figures showed the annual growth rate in unsecured consumer lending fell to 7.5 percent in October, its weakest since May 2015 from 7.9 percent in September, when there was a sharp drop in new car purchases.

Other economic data in recent months have mostly shown slower consumer demand since an unexpectedly robust summer, as shoppers rein in purchases and express concern about how leaving the European Union in March next year will affect them.

However, the BoE said the number of mortgages approved for house purchase rose to 67,086 in October from 65,726 in September, the highest number since January and above all forecasts by economists in a Reuters poll.

The housing market has slowed for most of this year, with major mortgage lenders reporting price growth slowing to a five-year low.

Net mortgage lending, which tends to lag behind approvals, also beat all forecasts at 4.121 billion pounds last month, up from 4.015 billion the month before, the BoE said.

On Monday industry body UK Finance reported the number of approvals for house purchase picked up to a four-month high in October, though they were still slightly down on a year earlier.

British house price growth has slowed this year, mostly due to falling prices in much of central London, where demand has been hit by higher purchase taxes on expensive homes and reduced foreign investor appetite since 2016’s Brexit vote.

Wednesday saw BoE Governor Mark Carney warn that in the unlikely – though growing – possibility of a “disorderly” departure from the EU in March next year, house prices could fall 30 percent as part of broader economic dislocation.

The central bank also said demand for consumer lending had been subdued by Brexit uncertainty, but could ramp up again once the prospects for Brexit were clearer.

Figures for October alone showed a 0.894 billion pound increase in unsecured lending, slightly below economists’ forecasts of a 1.0 billion pound rise.

(Reporting by David Milliken and Alistair Smout)

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