Mortgage approvals ease off previous highs
By Abigail Townsend
Date: Wednesday 26 Jun 2019
(Sharecast News) - Mortgage lending eased slightly in May, data published by the UK's high street banks showed on Wednesday.
Trade body UK Finance said gross mortgage lending in the residential market was £21.9bn, 0.4% lower than in the same month one year earlier.
On a seasonally-adjusted basis, the number of mortgages for home purchase eased to 42,384 from April's more than two-year high of 42,898. That was above consensus, however, with most economists looking for around 41,000.
On a non-seasonally adjusted basis, the number of mortgages for home purchase rose 9.1% to 49,683, its highest level since June 2016. Remortgage approvals eased 3.7% year-on-year, to 30,579.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The modest decline in mortgage approvals in May does little to change the record of surprising strength in the face of elevated economic and political uncertainty.
"Some of the recent pick-up reflects the main banks grabbing market share from building societies and other specialist lenders; the broader official measure of approvals was only 1,200 above its 12-month average in April. Nonetheless, the fall in buyer demand indicated by several surveys in the spring has not materialised in the lending data.
"Looking ahead, with households real incomes set to continue to rise at a solid rate, thanks to the tight labour market and low inflation, and mortgage rates set to fall in response to the recent decline in banks' wholesale funding costs, mortgage lending should remain on a slowly rising path in the second half of this year."
Howard Archer, chief economic advisor to the EY Item Club, said: "Despite dipping in May, mortgage approvals at 42,384 were still modestly above the 38,000-to-40,000 range that largely held since the start of 2018. However, they are still 16.6% below the long-run (1997 to 2019) average rate of 50,838.
"May's mortgage data tie in with the view that housing market activity got some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit has been limited."
UK Finance also found that there was £11.3bn of credit card spending in May, 5.6% higher than the same month a year earlier. The body added that repayments had remained in line with spending. Personal borrowing through loans rose 9.3%, while overdraft lending was down 3.2%.
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