UPDATED: MNI UK 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, which in turn could kick-start consumer

spending, or just an erratic jump in the data series. 

     Soft data point to a rather lacklustre housing market though one that may

be gaining a little traction. 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 while sales instructions increased markedly from -11 to -1.

     House price growth, measured by the Office of National Statistics' own

measure, recorded price growth of 5.1% in July, unchanged from June, slightly

better than the levels set at the start of the year. 

     Of the nine analysts polled in an updated MNI survey, the majority were

optimistic the solid gains in July will have been (roughly) maintained in

August. Approvals are seen roughly unchanged from the July outturn with a median

result of 68.0k.

     Given mortgage approvals act as a leading indicator on 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.

     On Monday the Bank's Financial Prudential Committee published the minutes

of is September 20 meeting, where it again earmarked consumer credit as a pocket

of risk to the UK financial system. 

     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% -- though still considered "rapid" by the

Bank this was 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.

     At present, banks' exposure to consumer credit amounts to stg145bn - 1/8th

that of total UK mortgage debt - and at 11% of overall household debt, it was

not considered a "material" to economic growth by the FPC. Instead, they said

that it posed as a risk to bank's ability to withstand severe economic

downturns, this given the asset class was more likely to default. 

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

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                             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      68.00

Forecast High                1.5           3.9       70.0

Forecast Low                 1.1           3.5       65.0

Standard Deviation           0.1           0.2        1.5

Count                          5             3          9

Prior                        1.2           3.6       68.7

Capital Economics            1.3           N/A       65.0

Credit Suisse                N/A           N/A       67.0

HSBC                         1.4           N/A       70.0

Investec                     1.1           3.9       66.0

Lloyds TSB                   N/A           N/A       69.0

Natixis                      N/A           N/A       68.0

Nomura                       1.5           3.7       68.0

Oxford Economics             1.3           3.5       68.0

Societe Generale             N/A           N/A       67.0

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

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