UK Mortgage Approvals Hit 5-Month High

(RTTNews) - UK mortgage approvals increased to the highest level in five months in November reflecting an improvement in the housing market activity, and consumer credit increased the most since 2018, official data revealed on Thursday.

The number of mortgage approvals, an indicator of future borrowing, increased to 50,067 in November from 47,888 in October, the Bank of England data showed.

The actual interest rate paid on newly drawn mortgages gained 9 basis points to 5.34 percent in November.

Capital Economics' economist Ashley Webb said lower mortgage rates will stimulate new mortgage borrowing, but many existing mortgage holders will still experience higher rates in the coming months. The result will be further moderate weakening in real consumer spending in the fourth quarter of 2023 and in the first quarter of 2024, the economist added.

Data showed that mortgage lending to individuals was at net zero in November compared to GBP 0.1 billion of net repayments in October. The annual growth rate for net mortgage lending reached 0.3 percent, which was the lowest since the monthly series began in March 1994.

At the same time, gross lending increased to GBP 16.6 billion from GBP 15.9 billion in October, while gross repayments decreased to GBP 15.6 billion from GBP 17.2 billion.

Further, consumer credit registered its biggest annual increase since September 2018. Consumer credit rose 8.6 percent.

Consumer credit borrowing climbed to GBP 2.0 billion from GBP 1.4 billion in the previous month.

The increase was mainly driven by net borrowing through credit cards, which doubled to GBP 1.0 billion from GBP 0.5 billion in October.

Net borrowing through other forms of consumer credit rose slightly to GBP 1.0 billion from GBP 0.9 billion.

Businesses repaid GBP 1.6 billion in November, following GBP 1.8 billion of repayments in October.

The annual increase in borrowing by large businesses eased to 1.0 percent from 2.1 percent.

Lending to small and medium-sized non-financial businesses fell 4.9 percent, faster than the 4.6 percent fall in October.