GO
Loading...

U.K. Mortgage Lending Jumps in Feb, Rate Rise Seen

British mortgage lending growth accelerated unexpectedly in February and home loan approvals also beat forecasts, reinforcing expectations of another rise in interest rates before long.

The Bank of England said on Thursday that mortgage lending rose by 10.256 billion pounds in February, up from 9.520 billion the month before and stronger than forecasts for a 9.4 billion pound increase.

Mortgage approvals -- a leading indicator of house prices -- were also higher than expected at 119,000 last month. This was unchanged from January and above forecasts that they would drop to 117,000.

Interest rate futures were slightly lower after the data. The BoE has raised borrowing costs three times since last August and short sterling rate futures are fully pricing in another quarter percentage point increase to 5.50% by the summer.

But analysts are divided on whether that move will come when policymakers meet next week or in May.

"While many other surveys suggest the housing market is losing steam, this would indicate there is still some life left in it," said Philip Shaw, economist at Investec. "The Bank of England's judgment on the housing market is likely to remain that the slowdown is tentative and interest rates will still need to rise."

Mortgage lender Nationwide said this week that house price inflation slowed in March and BoE Governor Mervyn King said there were signs the housing market was beginning to slow.

Consumer credit, however, rose less than expected and was up 919 million pounds -- the smallest increase since September 2006 -- suggesting consumers were a little more cautious about taking on unsecured debt.

Contact U.S. News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • This Day in History, April 28

    In 1967 Muhamad Ali refuses induction into the U.S. Army, in 2003 Apple launches the iTunes Music Store, and in 2004, Comcast abandons its bid to buy Disney.

  • Definitely don't sit in cash: Pro

    Edward Campbell, QMA portfolio manager, says stocks will perform better than bonds and reveals where he is seeing the best investment opportunities.

  • Can Apple grow market share?

    Gene Munster, Piper Jaffray analyst, digs deep into Apple' quarterly results, and explains why Apple needs to do more acquisitions.