UK mortgage approvals increased unexpectedly to a seven-month high in August despite the cost of living crisis, data released by the Bank of England showed on Friday.
The number of mortgages approved in August increased to 74,300 from 63,700 in July. Approvals were forecast to fall to 62,000.
This was the highest level since January 2022, and a notable rise following a downward trend over the previous several months.
Secured lending also increased unexpectedly in August, to GBP 6.1 billion from GBP 5.1 billion in July. This was above the pre-pandemic average of GBP 4.3 billion in the twelve months up to February 2020. The expected level for August was GBP 4.9 billion.
The surprise jump in mortgage approvals in August probably reflected a rush to lock in mortgage offers as interest rates surged, Andrew Wishart, an economist at Capital Economics said. There is a possibility that could be repeated next month, but ultimately the boost will be fleeting, the economist added.
Data showed that consumers borrowed an additional GBP 1.1 billion in consumer credit, a little below the additional GBP 1.5 billion borrowed in July but below economists’ forecast of GBP 1.4 billion.
The annual growth rate for consumer credit remained at 7.0 percent in August, which was the highest since March 2019. At the same time, credit card borrowing grew at a steady pace of 12.9 percent, the highest since October 2005.
UK businesses borrowed GBP 7.7 billion of bank and building society loans in August compared to GBP 2.0 billion of repayments in July. This was the highest flow of borrowing since April 2020.
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