Mortgage approvals in UK decline to 15-month low in June

Mortgage approvals in the United Kingdom declined to 15-month low during the month of June as British banks approved the fewest mortgages for house purchase since March 2015 last month and also cut lending to businesses. Also, the June 23 referendum spoilt the lending sentiment that weighed on mortgage approvals.

The number of mortgages approved by British banks last month dropped to 40,103 from May's downwardly revised 41,842, data released by the British Bankers’ Association (BBA) showed Tuesday. Also, net lending to non-financial businesses fell by 526 million pounds in June, the biggest fall since December last year.

"Business borrowing in June dropped for the first time in 2016, signalling that investment decisions were being delayed until after the vote," Reuters reported, citing Rebecca Harding, Chief Economist, BBA.

Moreover, the value of net mortgage lending dropped to 1.399 billion pounds in June from 1.665 billion, though it was well above a low of 208 million pounds struck in April, following the imposition of a new tax that was imposed on purchases of second homes and rental properties.

Gross mortgage borrowing rose 4 percent in June to GBP 12.2 billion, compared to a year ago period. Meanwhile, consumer credit continued to show annual growth of over 6 percent, possibly reflecting uncertainty and in the case of personal loans and overdrafts, favorable interest rates, BBA added in its note.