British mortgage lending grew at its fastest pace in three months in June and approvals for new home loans held steady in a sign the housing market is holding up in the face of a string of interest rate increases.
The Bank of England said on Monday lending secured on dwellings rose by 9.550 billion pounds in June after an 8.752 billion pounds rise in May. Analysts had predicted an 8.5 billion pound increase.
Mortgage approvals - a leading indicator for the housing market - held steady at 114,000 in June, against expectations for a dip to 109,000. The stronger than expected figures fly in the face of recent surveys suggesting the housing market is coming off the boil. Bank of England policymakers, however, have themselves noted that signs of any housing slowdown are at best tentative. "We expect some weakening in these numbers towards the end of the year, but for now the market seems to be holding up well," said George Buckley, chief UK economist at Deutsche Bank.
Interest rate futures ticked lower but overall the data did little to alter expectations the central bank will hold borrowing costs at 5.75 percent this week given financial market volatility and the fact it has already raised rates five times in the last year.
Many analysts, however, are predicting another quarter-point rise in borrowing costs to 6.0 percent by the end of the year. Unsecured lending grew by 874 million pounds in June, roughly in line with forecasts, following an 894 million pound increase in May.
Separately, the BoE released revised data on the money supply. M4, or broad money, increased by 0.7 percent in June, a downward revision from the 0.8 percent published earlier this month. That left M4 up 12.9 percent on the year, also revised down. M4 lending grew by just 0.3 percent - the weakest rate since June 2005 - leaving it 11.6 percent higher than a year ago.
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