UK Sept mortgage approvals hit 3-month high, underlying weakness still persists

UK mortgage approvals picked up in September after dropping to a 19-month low in August. Data released by British Bankers' Association on Wednesday showed number of mortgages approved for house purchases rose to 38,252 in September from 37,241 in August. September mortgage approvals were the highest since June, when approvals totaled 39,880.

In September, gross mortgage borrowing of GBP 12 billion was 2 percent lower than in September 2015. Net mortgage borrowing was 2.6 percent higher than a year ago. Compared to a year ago period mortgage approvals were still down 15 percent, suggesting underlying weakness in UK housing market still persists.

Consumer lending rose at the fastest rate since December 2006, driven by strong demand for personal loans and credit cards. September saw a net 175 million pound (S$298 million) increase in lending. Business lending declined, however, dropping by a net 312 million pounds in September, the biggest fall since June.

"Uncertainty about the implications of June's vote to leave the European Union, and the typically long period before cuts in BoE rates reduce the cost of business borrowing," notes BBA.