2023.09.2912:07:00UTC+00UK Mortgage Approvals At 6-Month Low

UK mortgage approvals fell to a six-month low in August as rising interest rates weighed on housing market activity, official data revealed on Friday.

Approvals for house purchases fell to 45,400 in August from 49,500 in July, the Bank of England reported. The expected level was 45,000.

The actual interest paid on newly drawn mortgages increased by 16 basis points to 4.82 percent.

At the September rate-setting meeting, the BoE kept its benchmark rate unchanged at the highest level since early 2008, after raising the rate over 14 consecutive sessions.

Lending and economic activity are likely to weaken further this year as the Bank keeps interest rates at 5.25 percent until late in 2024, Capital Economics' economist Ashley Webb said.

Mortgage borrowing posted the fourth consecutive monthly increase and also reached the highest since January 2023, data showed. Net borrowing rose to GBP 1.2 billion in August from GBP 0.2 billion in July.

Data showed that individuals borrowed an additional GBP 1.6 billion in consumer credit, up from GBP 1.3 billion in July. This was largely driven by increased borrowing through other forms of consumer credit. The annual growth in consumer credit rose to 7.6 percent from 7.3 percent in July. UK businesses repaid a net GBP 0.9 billion of loans in August following a net borrowing of GBP 0.6 billion in July. Net repayments by small and medium sized businesses rose to GBP 0.7 in August and net repayments by large businesses totaled GBP 0.2 billion.