Consumer lending has also slowed more sharply than expected, which is likely to reinforce concerns of some analysts that Britain’s rapid economic recovery from COVID-19 lockdowns is stabilizing, just as the BoE is considering. to raise interest rates.
The number of mortgage approvals fell to 72,645 in September from 74,214 the previous month, the lowest since July 2020, when the government reduced the property tax on stamp duties on most home purchases in order to boost sales after a crisis at the start of the pandemic.
That tax break was cut in July and stopped entirely at the end of September – before real estate purchases financed by mortgages approved that month had time to come to an end.
However, net mortgages for deals concluded in September jumped to 9.524 billion pounds ($ 13.13 billion), its highest level since June, the month before tax relief began to be cut in England. and Northern Ireland.
“The stamp duty holiday has been very distorting, resulting in the postponement of transactions and being a major factor in the price foam over the past year,” said Martin Beck, senior economic advisor at EY ITEM club. .
Official data shows UK house prices in August were almost 15% higher than before the pandemic. The United States, Germany and other countries where demand for living space increased during the pandemic have also seen sharp increases.
Mortgage approvals and net mortgage lending in the UK were both above economists ‘forecasts in a Reuters poll, but the increase in net consumer lending in September was barely half of economists’ average forecast at 234 million pounds.
Loans were up 0.1% from August – the smallest monthly increase since March – and were 1.8% below their level a year earlier.
Britain’s oldest survey of consumer confidence showed morale was at an eight-month low in October amid sharply rising inflation, rising COVID-19 cases and a shortage of fuel in many gas stations.
“The recovery in consumption will increasingly depend on the growing appetite of households for borrowing and the use of some of the ‘excess’ savings accumulated over the past 18 months,” Beck said. .