UK Mortgage Approvals Hit Over One-Year Low

By Wiktor Szary and Jason Douglas Features Dow Jones Newswires

The number of new mortgage approvals in the U.K. fell in October to its lowest in over a year, new figures showed Wednesday, a sign that Brexit uncertainty and above-target inflation has cooled the housing market.

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The number of mortgages approved by lenders last month stood at 64,575, down from September's 66,111, and the lowest figure since September 2016, the Bank of England's data showed.

Lending secured on dwellings stood at 3.4 billion pounds ($4.5 billion) in October, down from the previous month's GBP3.8 billion, and the lowest since April this year.

Since the Brexit vote last year, which triggered a sharp depreciation of sterling, British consumers have come under pressure from accelerating inflation which, combined with meager growth in wages, prompted them to rein in spending.

Many Britons also resorted to credit cards and consumer loans to sustain their spending habits, prompting officials to express concerns over the pace of growth in consumer credit.

But the BOE's data showed Wednesday that consumer credit slowed again in October, and stood at GBP1.5 billion. This was in line with the expectations of analysts polled by The Wall Street Journal.

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The BOE raised its borrowing costs earlier this month for the first time in a decade, increasing the benchmark interest rate from 0.25% to 0.5% to get the above-target price growth under control.

Announcing the results of its annual balance sheet health check earlier this week, the BOE said British banks would continue to lend even if a "disorderly" Brexit caused a severe economic downturn.

Nevertheless, the central bank said it would force lenders to keep extra capital as a buffer to weather any potential financial storm in the coming years.

Write to Wiktor Szary at Wiktor.Szary@wsj.com

(END) Dow Jones Newswires

November 29, 2017 04:50 ET (09:50 GMT)