The UK housing market is rapidly slowing, as surging inflation and subsequent rising interest rates bring what was once rapid growth to a near-standstill.
Latest data from the Bank of England shows significantly fewer borrowers are getting approved for mortgages, as higher interest rates ripple through the economy. Lenders approved a total of 58,977 home mortgages in October, marking the lowest since June 2020, and a modest decline from the 65,967 approved in the month prior. The net increase in lending last month came in at 3.966 billion pounds, which a stark drop from the 5.878 billion pounds reported in September.
Still, borrowing among consumers rose by 769 million pounds in net terms during that period, marking a slight increase from the 608 million pound increase in September. “October’s money and credit figures reveal further signs that households continue to remain cautious and higher interest rates are starting to weigh on the economy,” said Capital Economics economist Ashley Webb, as cited by Reuters.
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Lenders temporarily halted mortgage loans in wake of former Prime Minister Liz Truss’s disastrous mini-budget of unfunded government spending and tax cuts, which prompted pension funds to abruptly unload assets, forcing the central bank to intervene and stabilize the guilds market. The BOE data also underscores the impending slowdown in the UK housing market, with home prices forecast to fall 5% in 2023, as per projections by economists polled by Reuters.
Information for this briefing was found via the Bank of England and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
