MNI POLICY: BOE Mortgage Approvals Rise Due Non-Banks Lenders

By David Robinson and Jai Lakhani

     LONDON (MNI) - Bank of England money and credit data showed mortgage

approvals and consumer lending rose and average interest rates on shorter-term

fixed rate mortgages fell in January.

     The data add to the evidence that monetary conditions remain easy. The

following are key points from the data sets:

     --The headline rise in mortgage approvals, to 66,766 from 64,468, exceeded

analysts' expectations. Analysts tend to extrapolate from the data issued by

major British banks ahead of the BOE figures. The BOE data, which covers the

full range of mortgage lenders, showed that it was non-banks, the non-monetary

and financial institutions, that saw the sharpest rise in mortgage approvals.

Non-monetary and financial institutions saw a 12% month-on-month rise in

approvals, to 10,578 from 9,404.

     --Unsecured borrowing also rose markedly to stg1.095 billion from stg0.683

billion, a five-month high.

     --Month by month consumer credit numbers are volatile. While the January

outturn was an improvement on the recent dismal trend, it was overshadowed the

annual growth rate of 6.5% coming in at a 50-month low.

     --The BOE data showed that quote rates on 2 and 5 year 95% loan-to-value

(LTV) mortgages continued to fall, this time to a series low. This was also

reflected in the more common 75% LTV mortgages. The 3 year LTV rate was at its

lowest since June 2018 and the 2 year rate was down to a 4 month low.

     --However, quoted rates on mortgages with a longer period rose. The 5 year

and 10 year rates rose by 4bps and 2bps respectively. With the declines in

mortgage rates no longer across the board, the figures suggest the numbers as a

whole are close to reaching a trough. These quoted rates show "shop window"

prices for new mortgages, while the BOE's effective interest rate data series

shows average rates on the stock of mortgages. In January, the effective

interest rate held steady at 2.48%, a further sign that rates have bottomed out.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$$BE$]