- Mortgage Lending Record +17.9 Billion Pounds vs. +7.9 Billion According to Survey
- Lowest Level of Mortgage Permits Since July 2020
- Home Buyer Tax Cuts Effective July 1
- Consumer loans only increase
- Card spending increases to 94% of pre-pandemic level
LONDON, July 29. (Reuters) – UK mortgage lending saw record gains in June as homebuyers rushed to claim tax breaks before they were cut, but other data added signs that the rise in COVID-19 cases in recent weeks has slowed the broader recovery economy after isolation.
Mortgage loans have jumped £ 17.9 billion ($ 25.0 billion) since May, the largest monthly increase recorded by the Bank of England since 1993.
The scale of the increase underscores how tax breaks have rekindled the UK housing market, which has already been fueled by growing demand for larger properties as more people have worked from home due to the pandemic.
A Reuters poll of economists showed a much smaller net increase of £ 7.9 billion.
The data also showed that the end of the full tax credit has impacted new activity in the housing market.
Lender approval for new mortgages, which in June would have been too late for buyers to complete a purchase in time to qualify for tax breaks, fell to 81,300, the lowest since July 2020, the month the incentive first took effect. …
Under the scheme – part of Treasury Secretary Rishi Sunak’s support for the pandemic-stricken economy – the first £ 500,000 on any property purchase in England or Northern Ireland was exempt from stamp duty until the end of June.
The tax-free benefit of £ 250,000 is valid until the end of September.
In contrast to the surge in mortgage lending, UK consumer borrowing rose only marginally last month.
Unsecured lending increased by £ 300 million, well below the monthly average of £ 1.2 billion two years before the pandemic. A Reuters poll of economists showed an increase of 600 million pounds in June.
“These numbers echo with other early indicators, such as e-card spending, that the resurgence of COVID-19 cases has increased consumer caution,” said Kiran Tompkins, an economist at Capital Economics.
The Bank of England is expected to keep its stimulus program fully operational on August 5, after its last policy meeting, as it expects to see the impact of cuts in emergency government aid to workers and companies in the coming months, as well as progress in addressing issues. virus.
By the end of September, Sunak will gradually phase out the wage subsidy program.
Figures released Thursday showed that 4.9% of the workforce remained in the program in early July, although most were laid off only part-time and worked some of their regular hours for their employer. It was below 19.9% in January when the government ordered new isolation, but little has changed since late May.
Data from the National Statistical Office also showed that spending using payment cards rose last week, but was 6% below the pre-pandemic level, while online job postings rose 1% to 31% from the average. February 2020. read more
(1 dollar = 0.7163 pounds)
Additional reporting by Kate Holton Editing by Frances Kerry
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