UK Mortgage Approvals Decline; Consumer Credit Remains Unchanged

(RTTNews) - UK mortgage approvals declined in August ahead of the autumn budget and consumer credit remained flat, official data showed Monday.

The number of mortgage approvals, which is an indicator of future borrowing, fell by 500 to 64,700 in August, the Bank of England reported. This was also below the expected level of 65,000.

The actual interest paid on newly drawn mortgages declined for the sixth month in a row. The 'effective rate' hit 4.26 percent in August compared to 4.28 percent in July.

The BoE had reduced its benchmark interest rate five times since August 2024. The bank rate reached 4.00 percent, the lowest since early 2023.

Secured lending dropped by GBP 0.2 billion to GBP 4.3 billion in August after falling by GBP 0.9 billion in July, data showed today. Nonetheless, the annual growth rate rose to 3.0 percent from 2.9 percent.

Net borrowing of consumer credit by individuals remained flat at GBP 1.7 billion in August. On a yearly basis, consumer credit logged an annual growth of 7.1 percent, slightly faster than July's 7.0 percent rise.

UK businesses borrowed GBP 3.2 billion of loans from banks and building societies, following net borrowing of GBP 5.3 billion in July. Further, borrowing by large businesses increased at a faster pace of 8.6 percent, following an 8.1 percent rise in July.

Similarly, the annual growth rate of borrowing by small and medium-sized enterprises accelerated to 1.2 percent, the strongest since August 2021.