U.K. mortgage approvals rose in March, defying predictions of a drop as a tax break for first-time home buyers expired.
Lenders granted 49,860 loans to buy homes, compared with 49,029 in February, the Bank of England said today in London. Economists forecast 48,000, based on the median of 21 estimates in Bloomberg survey.
The property market received a boost in January as first- time buyers took advantage of a tax exemption on purchases of homes costing less than 250,000 pounds ($405,000) before it ended March 24. Approvals in February fell to the lowest since mid 2011.
“The stamp-duty holiday has been distorting the mortgage- approval figures, and we’re looking at a very slow recovery in the housing market,” said Victoria Cadman, an economist at Investec Securities in London.
Surveys shows the property market is struggling to gain traction as banks limit lending and consumers are squeezed by rising energy prices. Confidence may be further undermined after figures last week showed the economy in its first double-dip recession since the 1970s.
Bank of England Governor Mervyn King will deliver a radio address from London later today, a week before officials meet to decide whether to extend their stimulus program known as quantitative easing.
Net mortgage lending rose 966 million pounds in March, while consumer credit increased 419 million pounds, the central bank said. Credit-card lending rose 203 million pounds.
A measure of M4 money-supply growth the bank uses to assess the effectiveness of its asset purchases rose 6.4 percent in the three months through March on an annualized basis from 1.3 percent in the period through February, the central bank said. The gauge excludes financial companies that specialize in intermediating between banks, such as holding companies and non- bank credit grantors.
Total M4 fell 0.8 percent from February and was down 5 percent from a year earlier.
The Bank of England will announce its next policy decision on May 10 against a backdrop of deepening troubles in the euro region, the largest market for U.K. exports. Spain yesterday joined Britain, Italy, the Netherlands and Ireland in recession as efforts to tackle unprecedented debt burdens sap demand.
The Monetary Policy Committee will have new growth and inflation forecasts. They’ll also have completed their latest 50 billion-pound round of asset purchases. Officials held their stimulus target at 325 billion pounds last month and kept the benchmark interest rate at a record low of 0.5 percent.
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