MNI UK Preliminary Data Forecasts: August BOE Money and Credit

By Jamie Satchithanantham

     LONDON (MNI) - There was a marked rise in the Bank of England's measure of

mortgage approvals in July, much to the surprise of those who have been

following the series. 

     Approvals rose to 68,689 in July, up from 65,318 in June and sat

comfortably above the January-July average of 66,505. That approvals were stable

at 65,574 and 65,140 in May and April respectively, highlights the size of the

July jump.

     Data for August, therefore, will help decipher whether this is the start of

an upturn in the UK housing market or just an erratic jump that is set to be

reversed. The chances are tilted more towards the latter.

     Other soft data point to a rather lacklustre housing market lacking the

real impetus it has previously shown. Though the latest RICS survey recorded a

rise in house prices (the headline index was up to +6 from +1 in July), new

buyer enquires held firm at -4 and sales instructions remained in negative

territory (though it did rise form -11 to -1). 

     Of the four analysts polled in a preliminary MNI survey, all see approvals

falling back from the July outturn, to a median result of 67.5k.    

     Given mortgage approvals act as a forward indicator for homes sales, there

is the possibility that the rise in July approvals could have translated into

higher secured lending in August.

     Analysts see secured lending on dwellings rising to stg3.7bn in August from

stg3.6bn in July. Prior to this, lending had fallen to this July level from

stg4.1bn in June. 

     Net consumer credit also raised a few eyebrows in July, coming in more

subdued relative the levels set throughout 2017. In falling for the second month

in a row to stg1.2bn, down from stg1.4bn in June and stg1.8bn in May, annual

growth of consumer credit fell to 9.8% -- the first non-double digit growth rate

since last June.

     This tender downward trend in consumer credit could reflect tightening

credit conditions among lenders, as they begin to pare back on the provision of

consumer credit and car finance, on top of weaker consumer spending appetites. 

     On Monday, September 25 (0830 GMT), the Bank's Financial Prudential

Committee will publish a policy statement which could include measures aimed to

reduce consumer credit growth - previously earmarked as a potential financial

stability threat. That said, weak car sales and increased anticipation of an

interest rate hike could negate the need for any tighter macro-prudential

action.  

     Net Consumer credit is seen broadly unchanged at stg1.3bn in August.  

---------------------------------------------------------

                             Aug           Aug        Aug

                             BOE           BOE        BOE

                    Net Consumer  Net Mortgage   Mortgage

                          Credit       Lending  Approvals

                         % 3m/3m        stg bn      '000s

Date Out                  29-Sep        29-Sep     29-Sep

Median                       1.3           3.7       67.5

Forecast High                1.5           3.9       68.0

Forecast Low                 1.1           3.5       66.0

Standard Deviation           0.2           0.2        1.0

Count                          3             3          4

Prior                        1.2           3.6       68.7

Credit Suisse                N/A           N/A       67.0

Investec                     1.1           3.9       66.0

Nomura                       1.5           3.7       68.0

Oxford Economics             1.3           3.5       68.0

     This survey will be updated on Sept 25.

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

[TOPICS: MTABLE,MABDT$,M$B$$$,M$E$$$]