U.K. mortgage approvals increased more than expected in June and secured lending climbed most since 2008, data from the Bank of England showed Wednesday.
The number of loan approvals for house purchase totaled 66,582 in June, up from 64,826 in May. It was forecast to increase marginally to 66,000.
IHS Global Insight Economist Howard Archer said housing market activity is now clearly on the up.
Nevertheless, the upside for housing market activity and prices is expected to be constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the strong likelihood that interest rates will soon start rising gradually, he noted.
Lending secured on dwellings increased GBP 2.6 billion versus GBP 2.4 billion rise in May. This was the biggest monthly growth since July 2008 and above GBP 2 billion growth forecast by economists. It gained 0.2 percent from May and 1.9 percent from last year.
At the same time, net consumer credit advanced GBP 1.2 billion in June, while economists expected it to rise by GBP 1.1 billion as seen in May.
Meanwhile, loans to non-financial businesses decreased GBP 5.5 billion versus an increase of GBP 0.8 billion in May.
The strong economic backdrop and improving availability of credit should bring about a revival in bank lending to firms, Paul Hollingsworth, an economist at Capital Economics, said. Meanwhile, with consumer confidence at a 15-year high, the economist expects mortgage borrowing to pick up further too.
M4 money supply fell 0.3 percent year-on-year in June, reversing May’s 0.5 percent increase. Month-on-month, it slid 0.5 percent, offsetting 0.5 percent rise a month ago.
The material has been provided by InstaForex Company – www.instaforex.com