Mortgage approvals by the six largest banks in the UK dropped in January, as freezing weather across the country prevented homebuyers from arranging loans.
According to a sample from the lending panel of the Bank of England, the total number of home loans granted by these institutions was 49,000, compared with the 60,000 approvals in December.
“Major UK lenders reported that the recent slowing of mortgage lending and approvals reflected one-off factors,” said the central bank in a statement. “The severe weather around the turn of the year had depressed mortgage approvals in January, notwithstanding a recovery of activity in the second half of the month.”
The Bank of England’s policy makers decided to suspend their bond-purchase plan this month at 200 billion pounds ($313 billion) to assess the strength of the financial recovery. The data from Rightmove Plc for this month showed that the asking price for UK homes has increased to the highest level since April 2007.
According to the Council of Mortgage Lenders, mortgage lending in the UK declined 32 percent in January to 9.1 billion pounds from the previous month, which was the lowest monthly total since February 2000.
The increase in home loan approvals at the end of 2009 was partly due to several households trying to complete their purchases before the government ends its relief on taxes levied on new home purchases on January 1, the bank said.
The Bank of England’s sample released covers data from HSBC Holdings Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc, Nationwide Building Society, Barclays Plc and Banco Santander SA. Together, these banks accounted a mortgage lending of about 70 percent at end-2008.
The asking price of sellers rose 3.2 percent in January across England and Wales, according to the country’s biggest property website. Values are recovering after it fell almost 12 percent from the peak in May 2008 to January 2009.
Although officials from the central banks said they can “provide further monetary stimulus” if necessary, its policy makers voted 9-0 for no change to the bond purchase plan.
Separate figures from the Bank of England showed that M4, the broadest measure of money supply, increased 0.6 percent in January from a month earlier, and 5.1 percent from a year earlier.