UK Mortgage Approvals Fall Unexpectedly; House Prices Rise

(RTTNews) - UK mortgage approvals declined unexpectedly to the lowest level in more than a year in April as stamp duty holiday ended in March, data from the Bank of England revealed Monday.

Elsewhere, data from the mortgage lender Nationwide Building Society showed that house prices rebounded unexpectedly in May suggesting momentum in underlying demand.

Approvals for home loans rose to 60,463 in May from 63,603 in the previous month, the central bank data showed. This was the fourth consecutive decrease and hit the lowest since February 2024. Loan approvals were forecast to increase to 65,000.

Gross lending decreased significantly to GBP 16.9 billion in April from GBP 39.9 billion in March, which was the biggest fall since June 2021, the BoE said.

At the same time, net borrowing of mortgage debt by individuals decreased sharply by GBP 13.7 billion to -GBP 0.8 billion in April. Net borrowing of consumer credit by individuals was GBP 1.6 billion in April, up from GBP 1.1 billion in the previous month. Consumer credit growth rose to 6.7 percent in April from 6.2 percent in March. Data showed that UK businesses borrowed GBP 1.2 billion of loans from banks and building societies, following GBP 2.0 billion of net borrowing in March.

While borrowings of large businesses fell to GBP 1.3 billion, borrowing of small and medium businesses remained flat.

House prices grew 0.5 percent on a monthly basis, in contrast to the 0.6 percent fall in April, the Nationwide Building Society reported. Prices were expected to remain flat. Annual growth in house prices edged up to 3.5 percent from 3.4 percent.

Nationwide's Chief Economist Robert Gardner said mortgage approvals data suggests that market activity appeared to be holding up well following the end of the stamp duty holiday. Despite wider economic uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive, Gardner said.