Nov. 29 (Bloomberg) -- U.K. mortgage approvals rose more than economists forecast in October as record-low interest rates helped to support the housing market.
Lenders granted 52,743 loans to buy homes, compared with a revised 51,193 the previous month, the Bank of England said today in London. Economists forecast that approvals would rise to 51,800 from an initially reported 50,967 in September, based on the median forecast of 18 economists in Bloomberg News survey. Still, the reading is about half the monthly average of 103,000 in the decade to 2007, before the financial crisis.
Some Bank of England policy makers have said the central bank may have to increase stimulus as the intensifying euro area crisis threatens to push the U.K. back into a recession. While U.K. house prices rose for a third month in November, property values will “remain soft” and may slip again over the coming year, Nationwide Building Society said today.
“While mortgage approvals have firmed modestly from a low in December 2010, they remain extremely low compared to long- term norms and there is still little evidence that housing market activity is really shifting up a gear,” Howard Archer, an economist at IHS Global Insight in London, said before the announcement.
Net mortgage lending was 1.29 billion pounds ($2 billion) in October, while net consumer credit was 49 million pounds, the central bank said.
The deteriorating outlook prompted Bank of England officials to expand its emergency bond-purchase program by 75 billion pounds in October. U.K. central bank policy maker Martin Weale said last week there may be a “strong case” for policy makers to expand stimulus again. Markets Director Paul Fisher said yesterday the economy may need more quantitative easing.
The Bank of England held its benchmark interest rate at 0.5 percent and its bond-purchase plan at 275 billion pounds this month.
A measure of M4 money-supply growth the bank uses to assess the effectiveness of its asset purchases rose 5 percent in the three months through October on an annualized basis, today’s report said. That compares with a 5.3 percent gain in the three months through September. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non-bank credit grantors.
Total M4 fell 0.3 percent in October from the previous month and was down 2.7 percent on the year, the Bank of England said.
The average cost of a home rose 0.4 percent from October to 165,798 pounds, Swindon, England-based Nationwide said in an e- mailed report today. From a year earlier, values were up 1.6 percent.
--With assistance from Mark Evans in London. Editors: Andrew Atkinson
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