Free Trial

MNI 5 Things: UK Mortgage Rates Rise Muted; Approvals' 7M High

MNI (London)
By David Robinson and Jai Lakhani
     LONDON (MNI) - The following are the key points from the Bank of England
(BOE) money and credit data in August:
     --Mortgage approvals hit a 7-month high in August, up to 66,440 from July's
fall to 65,156. Whilst a 7-month high, the range in 2018 is narrow, with no
clear indication of an up-trend.
     --Net consumer credit, a measure of unsecured borrowing, recovered in
August to stg1.118 billion (bn) from stg0.838bn in July. However, this was not
only below the MNI median of stg1.4bn, but below the six-month average of
stg1.3bn. The un-flattering growth was primarily down to little growth from
other loans and advances which was stg0.2bn below its six-month average.
     --Mortgage borrowers have at most experienced only marginal rises in
mortgage fixed-rate borrowing costs. This is despite the BOE Monetary Policy
Committee (MPC), between November last year and August this year, raising Bank
Rate from 0.25% to 0.75% .
     The average 2-year fixed rate 75% loan-to-value (LTV) quoted rate this
August was 1.75%, just 14bps above the 1.61% in November 2017. Also, the 3-year
75% fixed LTV was also just 14bps up from November 2017.
     --The UK mortgage market is showing signs of fragmentation. Interest
payments on 75% LTV buy-to-let mortgages have been trending downwards and the
August rate of 2.30% is the lowest since the series began.
     --In the riskiest segment of the mortgage market (95% LTV), interest rates
for a 2-year fixed and a 5-year fixed are the lowest since the series began. The
BOE has sought to curtail borrowing in the higher-risk segment by imposing a cap
on banks' high multiple loan-to-income (LTI) lending.
     This data supports anecdotal evidence of some banks aggressively seeking
business in a demand-impeded but high-risk segment of the market.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MABDS$,MAUDR$,MAUDS$,M$B$$$,M$E$$$,M$U$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.