2023.11.2911:58:00UTC+00UK Mortgage Approvals Hit 3-Month High

UK mortgage approvals increased more than expected to a three-month high in October signaling a slowdown in the housing market downturn after the central bank kept interest rates unchanged in September and November.

Net mortgage approvals for house purchases rose to a three-month high of 47,400 in October from 43,700 in September, the Bank of England reported Wednesday. The expected level was 45,000.

The actual interest paid on newly drawn mortgages increased 24 basis points to 5.25 percent.

The BoE had kept its key interest rate unchanged at 5.25 percent at November and September meetings, snapping a streak of 14 consecutive rate hikes. The rate was lifted by a cumulative 515 basis points since December 2021.

Individuals repaid GBP 0.1 billion of mortgage debt in October compared to GBP 1.0 billion of net repayments in September.

Consumer credit decreased to GBP 1.3 billion from GBP 1.4 billion in the previous month. The fall largely reflects the decrease in net borrowing through credit cards. On a yearly basis, consumer credit posted an increase of 8.1 percent, which was the highest since October 2018.

Data showed that households deposited GBP 4.6 billion with banks and building societies in October, the highest since November 2022.

Further, businesses repaid GBP 1.1 billion from banks and building societies, following September's GBP 5.0 billion of borrowing.

Paul Dales, an economist at Capital Economics said higher interest rates are continuing to percolate through the economy.

"As a result, the drag on real consumer spending and business investment will soon grow," the economist added.