MNI 5 Things: UK Mortgage Approvals Rise But Hide Weakness

By Jai Lakhani and David Robinson

     LONDON (MNI) - The following are the key points from the June money and

credit data release published Monday by the Bank of England (BOE):

     -Mortgage approvals rose and the average standard variable rate fell in the

BOE's June money and credit data. The survey's other contrasting results and

recent private sector housing market surveys all suggest that the reported rise

in activity is not going to herald a new trend. Interest rates on fixed-rate

mortgages rose and property surveyor data from RICS showed new buyer demand

remains subdued.

     -Despite no change in Bank Rate of 0.5% since November 2017, the variable

rate on mortgage lending has fallen, suggesting intensified competition. The

standard variable rate of 4.06% for June was the lowest since June 2011.

     -Fixed-rate mortgages better reflect the market expectations of a rise in

the bank rate. The quoted rates on a 2 year 85% loan-to-value (LTV) and a 2 year

95% LTV were their highest since May 2016 and November 2017 respectively- at

2.09% and 3.96%.

     - Mortgage approvals ticked up further in June to 65,619, up from 64,684 in

May and above the six-month average of 63,858. With borrowing costs now

appearing to rise, its questionable whether this improvement will be sustained.

     -Unsecured borrowing remains fairly volatile on a month-to-month basis with

net consumer credit dropping slightly in June to stg1.567bn from stg1.575bn in

May. The June figure was however above the six month average of stg1.4bn. The

slight drop appears to be from a marginal decrease in the month-on-month growth

rate of credit card lending.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

[TOPICS: MABDS$,MAUDR$,MAUDS$,M$B$$$,M$E$$$,M$U$$$]