UK mortgage approvals fell for the first time in three months in July as higher interest rates made it harder for Britons to afford a home.
Banks and building societies authorized 49,444 home loans, the fewest since February, according to the Bank of England. Economists had expected a decline to 51,000.
The figures add to evidence showing the housing market is cooling in the face of surging mortgage costs. Earlier Wednesday, property portal Zoopla said UK home sales are on track to plunge more than 20% this year to their lowest level since 2012. While mortgage rates are beginning to edge lower, borrowing costs for households remain far higher than they were a year ago. That’s compounding the cost-of-living crisis, with prospective buyers facing rising rental costs and elevated prices for food and other everyday goods.
The effective interest rate on new mortgages rose by a further 3 basis points, to 4.66% in July, the BOE said. Consumers took out £1.2 billion on unsecured credit such as credit cards, down from £1.6 billion the previous month. They deposited an additional £400 million with banks and building societies, compared to £3.8 billion in June.“Mortgage approvals nosedived by almost 10% in one month as the spike in borrowing costs hit demand in July. We expect elevated interest rates will continue to contain new mortgage applications, weighing on the British housing market ahead.
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