‘Markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on house prices.’ – Howard Archer, HIS Markit
Official data released on Friday revealed that the number of mortgage approvals in the United Kingdom jumped to a 12-month high in January. The British Bankers’ Association reported mortgage approvals rose to 44,657 in January, compared with December’s 43,581 reading. The reported month’s figure was the highest since January a year ago, when mortgage approvals climbed to 45,794. Furthermore, the BBA reported its gross mortgage borrowing surged 6.3% year-over-year to £13.8B in January, while net mortgage borrowing was 2.4% higher in the same month in 2015. In addition, remortgaging approvals grew nearly 16%, being mainly influenced by record-low interest rates in the UK. Moreover, the unsecured consumer borrowing increased to an annually adjusted rate of 6.7% in spite of weaker retail sales. Consumer credit growth remained mainly driven by an increase in personal loans amid slowdown in credit card loans.
Overall, the Bank of England is likely to observe closely tendencies of borrowing more as household income is set to terminate growth this year.
