This article by Scott Hamilton of Bloomberg on October 29th, 2013 tells us that on September mortgage approvals in UK rose to the highest level.
U.K. mortgage approvals rose to the
highest in 5 1/2 years in September, adding to signs of a
strengthening property market that’s being stoked by government
incentives.
Lenders granted 66,735 mortgages, the most since February
2008, compared with a revised 63,396 the previous month, the
Bank of England said in a report in London today.
Home-loan
rates fell to a record low, and gross mortgage lending was 15.6
billion pounds ($25 billion), the highest since October 2008.
Hometrack Ltd. said yesterday that house prices in England
and Wales rose 3.1 percent in October from a year earlier, the
biggest gain since 2007. Chancellor of the Exchequer George Osborne’s acceleration of his Help to Buy program this month is
boosting real-estate activity and Hometrack said the gap between
supply and demand is widening.
“The housing market is surging as low interest rates and
rising confidence feed buyer interest,” said Rob Wood, an
economist at Berenberg Bank in London. “It is early days, as
real house prices and transactions are still below their pre-crisis levels. But the key issue is not where prices are today,
rather it is where they will be in a couple of years. Prices and
activity are rising fast.”
The September mortgage approvals figure exceeded
economists’ forecasts. They predicted an increase to 66,000,
based on the median of 23 estimates in a Bloomberg News survey.
Net mortgage lending rose 1.03 billion pounds last month and
consumer credit increased 411 million pounds, the BOE said.
Mortgage Rates
The BOE also reported that mortgage interest rates fell to
a record low in September. The effective interest rate on all
outstanding home loans fell 2 basis points to 3.3 percent. On
new loans, the rate dropped 7 basis points to 3.08 percent.
Former Financial Services Authority Chairman Adair Turner
has added his voice the critics of Osborne’s housing program,
saying in an interview published yesterday that Britain risks
repeating the debt-fueled binge that led to the credit crisis.
Despite government pledges to rebalance the economy away
from consumer spending and the housing market, “we now seem to
be having a recovery which is heavily focused on that favorite
old British activity, which is another house price boom,”
Turner said. “That’s not a sustainable, balanced economy.”
While mortgage lending is rising, approvals remain below
their average of about 104,000 in the decade through 2007. BOE
policy makers have cited that figure as they downplayed the
risks from the housing market. Jon Cunliffe, who will join the
BOE as deputy governor for financial stability next month, said
on Oct. 15 that housing market is not overheating.
Corporate Lending
Separately, the BOE said business lending rose 720 million
pounds in September from August. While that compares with an
average decline of 1.5 billion pounds over the previous six
months, lending was still down 3.2 percent from the same month a
year earlier, according to the data.
For small and medium-sized companies, lending fell 383
million pounds on the month and was down 3.2 percent versus a
year earlier.
The pound remained lower against the dollar after the data
and was trading at $1.6091 as of 10:28 a.m. London time, down
0.3 percent on the day. The yield on the benchmark 10-year U.K.
government bond fell 1 basis point to 2.59 percent.
The BOE also said foreign investors bought a net 2.48
billion pounds of gilts in September. That followed a net sale
of 6 billion pounds in August. It said M4, a broad measure of
money supply, rose 0.6 percent in September from August and 2.6
percent from a year earlier.
To contact the reporter on this story:
Scott Hamilton in London at
shamilton8@bloomberg.net
To contact the editor responsible for this story:
Craig Stirling at
cstirling1@bloomberg.net
Article Source: http://www.bloomberg.com/news/2013-10-29/u-k-mortgage-approvals-rise-to-highest-level-in-5-1-2-years.html
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