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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:
MNI London Bureau | +44 203-865-3812 |

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