UK Mortgage Approvals Fall Slightly; Consumer Credit Drops

(RTTNews) - UK mortgage approvals for house purchase decreased slightly in February, as changes in stamp duty from April 1 softened housing market activity, while consumer credit decreased from the last month, official data showed on Monday.

Mortgage approvals for house purchases decreased 600 to 65,500 in February, the Bank of England reported. This followed a decrease of 400 in January. Approvals were forecast to rise to 66,000.

The 'effective' interest rate, which is the actual interest paid on newly drawn mortgages, increased by 2 basis points to 4.53 percent in February.

Consumer credit declined to GBP 1.4 billion from GBP 1.7 billion in the previous month.

Net borrowing of mortgage debt fell by GBP 0.9 billion to GBP 3.3 billion, following an increase of GBP 0.8 billion in January. Net mortgage lending growth was broadly unchanged at 1.9 percent.

Meanwhile, gross lending increased to GBP 24.3 billion in February from GBP 21.7 billion in January. This was the highest since November 2022.

Further, data showed that companies repaid a net GBP 0.5 billion of loans, following a net borrowing of GBP 2.4 billion in January.

Today's data provide some green shoots of households starting to save less and spend a little more freely, Capital Economics economist Ashley Webb said. However, one month does not make a trend and GDP will probably remain restrained in the near term, the economist noted.