UK Mortgage Lending Strongest Since 2022, Approvals Fall Slightly

(RTTNews) - Mortgage borrowing of British homebuyers hit the highest since September 2022, while home loan approvals decreased slightly in January ahead of the stamp duty changes in April, figures from the Bank of England showed on Monday.

Mortgage lending increased GBP 0.9 billion to GBP 4.2 billion in January, which was the highest since September 2022. This followed an increase of GBP 1.1 billion in December.

Net mortgage lending showed an annual increase of 1.8 percent in January from 1.5 percent in December, continuing the upward trend observed since April 2024.

At the same time, mortgage approvals for house purchases decreased 300 to 66,200 in January, compared to an increase of 400 in December.

The 'effective' interest rate, which is the actual interest paid on newly drawn mortgages increased 4 basis points to 4.51 percent in January.

Net consumer credit borrowing by individuals rose to GBP 1.7 billion from GBP 1.1 billion in the previous month. Consumer credit growth eased slightly to 6.4 percent from 6.5 percent in December.

Within this, net borrowing through credit cards increased to GBP 1.1 billion from GBP 0.4 billion and was the highest increase since November 2023.

Further, data showed that large non-financial businesses borrowed GBP 1.9 billion in January, compared to GBP 0.9 billion of net repayments in December.

Net borrowing by small and medium-sized non-financial businesses increased slightly to GBP 0.5 billion from GBP 0.4 billion in the previous month.

Capital Economics economist Ashley Webb said the stagnation in the economy partly reflects households' mood to save rather than spend, which is unlikely to change over the next six months with the sharp deterioration in the outlook for employment.

Meanwhile, the housing market continued to shrug off the weakness in the wider economy, the economist added.