UK Mortgage Approvals Drop to Six-Month Low Before Tax Hike
(Reuters) -British mortgage approvals cooled to a six-month low in February ahead of a rise in transaction taxes on many house purchases while consumer lending grew at the joint-slowest pace in nearly three years, Bank of England data showed on Monday.
Lenders approved 65,481 mortgages in February, down from 66,041 in January. This was the lowest number since August and just below the median in a Reuters poll of economists which had pointed to approvals of 66,000.
Net unsecured lending to consumers increased by slightly more than expected, up 1.358 billion pounds ($1.76 billion) in February after a 1.701 billion pound increase in January.
On an annual basis, consumer lending growth matched January's 6.4% rate, which was the lowest since May 2022.
Matt Swannell, chief economic adviser to the consultancy EY ITEM Club, said slowing mortgage approvals reflected an unwinding of a boost late last year, when homebuyers sought to purchase homes ahead of an increase in property transaction taxes in April.
"In the near term, (this) will continue to drag on mortgage activity," he said.
In the three months to the end of February, net mortgage lending - which reflects completed transactions - grew at the fastest pace since the three months to the end of November 2022, when former prime minister Liz Truss' aborted budget plans led to mortgage lending drying up.
While net consumer lending increased at a slower pace in February, analysts said the better-than-expected monthly increase chimed with strong retail sales data.
"Overall, the data is in line with a picture of a slow, gradual improvement in consumer spending, which should help push (economic) growth up to 0.3% quarter-on-quarter in the first quarter," said Thomas Pugh, economist at accountancy firm RSM.
($1 = 0.7729 pounds)
(Reporting by Andy Bruce; editing by David Milliken, William Maclean)
