Mortgage approvals for house purchases in Britain rose to a three-month high in April, according to data released by the Bank of England on Tuesday.
The Bank of England said the number of mortgages approved for house purchases increased to 65,945 in April from 63,979 in March.
The latest data also showed stronger-than-expected growth in consumer borrowing, suggesting households continued to access credit despite signs of weakening sentiment and pressure from higher borrowing costs.
Mortgage approvals exceed forecasts
The rise in mortgage approvals marked the highest level in three months and came in well above economists’ expectations.
Mortgage approvals are closely watched as an indicator of future housing market activity because they reflect lending decisions made before property purchases are completed.
While the increase points to resilience in demand during April, more recent housing market indicators have suggested that conditions may be becoming less favourable.
Consumer credit growth remains strong
The Bank of England’s figures showed net unsecured lending to consumers rose by £1.859 billion in April.
The increase was higher than economists’ forecast of a £1.7 billion rise.
However, it was slightly below the £1.904 billion increase recorded in March.
The data indicate that consumers continued to borrow through unsecured forms of credit, although the pace of growth moderated marginally compared with the previous month.
Housing market shows signs of cooling
Despite the stronger mortgage and lending data, more recent reports have pointed to weaker momentum in Britain’s housing market.
Weaker consumer sentiment and rising mortgage rates since the start of the Iran war in late February have led lenders, including Nationwide Building Society, to report softer market conditions.
Nationwide said house prices recorded their first monthly decline since December in May.
Separate figures from the Royal Institution of Chartered Surveyors also showed declines in both house prices and buyer demand during April, highlighting a slowdown in market activity.
House prices fall in May
According to figures released by Nationwide Building Society on Monday, British house prices fell by 0.6% in May compared with the previous month.
Annual house price growth also slowed to 1.7%.
The latest data showed house prices remained 1.7% higher than a year earlier, but this represented a slowdown from the 3.0% annual growth rate recorded in April.
Nationwide’s seasonally adjusted house price index fell to 551.0 in May from 554.3 in April.
On a non-seasonally adjusted basis, the average house price declined to £278,024 from £278,880 a month earlier.
The combination of slowing house price growth, weaker buyer demand, and softer consumer sentiment suggests that the housing market may be losing momentum, even as April’s mortgage approval figures and consumer borrowing data showed resilience in household lending activity.
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