International Property

UK mortgage approvals hit 15-month low in November, says UK Finance

A Reuters poll of economists has indicated that house prices will rise little more than 1 per cent in 2018, with London prices set to fall for the first time in eight years

PUBLISHED : Tuesday, 02 January, 2018, 12:03pm
UPDATED : Tuesday, 02 January, 2018, 6:00pm

British banks approved the fewest mortgages in 15 months in November, when the Bank of England raised interest rates for the first time in more than a decade, industry figures showed last week.

Banks approved 39,507 mortgages for house purchase in November, down from 40,417 in October and 5 per cent fewer than in November 2016, trade association UK Finance said.

At the start of the month, the Bank of England raised interest rates from a record low 0.25 per cent to 0.5 per cent.

“Housing market activity remains under pressure from squeezed consumer finances and fragile confidence, and it may well have taken a further dent in November from the Bank of England lifting interest rates,” Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

A Reuters poll of economists two weeks ago suggested British house prices will rise little more than 1 per cent this year, with those in London set to fall for the first time in eight years.

Last month, finance minister Philip Hammond sought to offer voters some relief with spending plans that focused on housing, including scrapping a property purchase tax for most first-time homebuyers.

“Even if successful, (Hammond’s) measures to boost house building in November’s budget will take time to have a significant effect so are unlikely to markedly influence house prices in the near term at least,” Archer said.

More comprehensive lending figures from the Bank of England are due this Thursday.

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