Search Share Prices
UK mortgage numbers rise more than expected
The value and number of UK mortgages improved more than expected in April, confirming a stabilising of housing demand, while credit card data also showed strongly in value in April with numbers of mortgage approvals driven by 30% growth in remortagaging.
The number of total mortgage approvals rose 11% to 40.6K due to the rise in remortgage numbers, the highest level since September, up from 38.7K in March and much higher than the 37.4K economists had expected.
Mortgage approval numbers averaged 39.1K in the three months to April, up from the 38.4K in the previous three months.
Gross mortgage lending was estimated to have been £20.4bn in April, banking trade body UK Finance said, following a slowdown in activity the previous month.
The pick up in house purchase mortgage approvals partly reflects some activity shifting to April from February and March due to the bad weather, said Samuel Tombs at Pantheon Macroeconomics, with the improvement in the three-month average suggesting that demand has stabilised.
Supporting that conclusion, he pointed to a rise in new buyer enquiries balance from the latest RICS' residential survey to its highest level since August, consistent with broadly flat demand.
"Consumers' confidence, however, is fragile, and mortgage lending spreads likely will continue to widen over the coming months in response to the recent closure of the Term Funding Scheme. Households' real incomes, meanwhile, will rise only modestly, given that inflation looks set to remain above 2% throughout the rest of this year and firms' employment intentions have weakened. All told, then, mortgage lending likely will remain at subdued levels throughout the rest of this year."
After the Bank of England ended the Term Funding Scheme in February, forcing lenders to find other sources of funding, Henry Woodcock, mortgage consultant at IRESS, said: "Many industry commentators have said lenders will be forced to increase mortgage rates as the 'cheap' money provided by the scheme runs out. And there's some evidence this is happening already.
"I expect this trend of slowly increasing lender rates will continue over the Summer months. I also predict there will be a rebalancing of the market as buy-to-let activity diminishes further still, following stamp duty increases and tapering of tax relief for landlords."
CREDIT CARDS, SAVING, BUSINESS BORROWING
Credit card spending was 9.8% higher than a year earlier, UK Finance also revealed, with outstanding levels of credit card borrowing falling to 5.2% over the year from 5.7% in March.
Personal deposits have averaged 1.4% in the past six months, slightly down on the previous six month average of 2% but still up compared to the same period last year, with consumers opting for instant access accounts over those with notice.
ISA cash deposits across the high street banks saw a slight increase on the previous month to coincide with the end of the tax year.
UK business borrowing contracted slightly by 1.7% year on year, though manufacturers maintained strong growth at 8% while construction borrowing contracted 6.3%.
UK business deposits grew by 4.4% in the last 12 months down on the previous six month average of 6%.