December 4, 2022

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UK mortgages hit 13 year-high but consumers curb other borrowing

FILE PHOTO: A security officer stands outside the Bank of England, as the spread of the coronavirus disease (COVID-19) continues, in London, Britain, March 23, 2020. REUTERS/Toby Melville

LONDON (Reuters) – British mortgage approvals hit their highest in almost 13 years in August, underscoring the scale of the post-lockdown bounce-back in the housing market, but consumers turned more cautious about day-to-day borrowing, Bank of England data showed.

Mortgage approvals jumped to 84,700 from 66,300 in July, hitting their highest level since October 2007.

Economists polled by Reuters had expected about 71,000 approvals.

Mortgage lending rose by a weaker-than-expected 3.1 billion pounds ($4.0 billion) in July.

But consumer borrowing – a key driver of economic growth – increased by only around 300 million pounds in August from July compared with a median forecast for a 1.45 billion pound increase in the Reuters poll.

Alistair McQueen, head of savings and retirement at insurer Aviva, said many households were likely to start saving more in anticipation of further economic turmoil caused by the reintroduction of stricter local lockdown measures.

“This will dent consumer spending, which will curb the UK’s economic recovery.”

Compared with August last year, consumer borrowing sank by 3.9%, the sharpest fall since the BoE began measuring the data in 1994.

Reporting by William Schomberg and David Milliken

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