Housing market slowdown worsens as mortgage lending falls to weakest since Brexit vote

Lending grew £2.7bn, the least since April 2016, the figures from the Bank of England show

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The Independent Online

Net mortgage lending fell to its weakest since before the Brexit vote in a further sign that the housing market is running out of steam.

Mortgage lending grew £2.7bn, the least since April 2016, new data from the Bank of England shows.

Lenders approved 64,645 home loans in April, the lowest monthly figure since September, and well below average forecasts in a Reuters poll of economists.

Halifax reported earlier this month that house prices fell 0.2 per cent in the three months to April, their first quarterly decline in more than four years.

Meanwhile, consumers took advantage of low interest rates to rack up an extra £1.5bn of unsecured debt in April. Consumer credit has risen by 10.3 per cent in the past twelve months, the Bank of England said. 

That suggests shoppers may be compensating for rising prices by taking on cheap debt to finance purchases.

GfK said in a separate report on Wednesday that the full impact of the squeeze on purchasing power has “yet to hit home” after its monthly index of confidence rose this month.

Consumer demand is not slowing as rapidly as a slump in official first-quarter retail sales data had previously suggested, though rising inflation - fuelled by increased energy costs and the pound's slump after the Brexit vote - has not yet fully filtered through to households.

Laith Khalaf, senior analyst at Hargreaves Lansdown said: “The one saving grace for UK consumers is mortgage interest rates are still at extremely low levels, highlighting the bind that the Bank of England finds itself in. 

“Despite rising inflation it’s really in no position to raise interest rates anytime soon without damaging the engine of the British economy. Consequently we can still expect UK interest rates to remain low for some considerable time yet.”