LONDON, July 29 (Reuters) – UK mortgage lending surged by a record amount in June as homebuyers rushed to take advantage of the tax credit before it was cut, data from the Bank of England showed on Thursday.
Compared to May, mortgage loans were up 17.9 billion pounds ($ 25.0 billion), the largest monthly increase since 1993.
The increase added signs that tax breaks have spurred the UK housing market, which is already fueled by growing demand for larger properties as more people have been working from home due to the coronavirus pandemic.
A Reuters poll of economists showed a much smaller net increase of £ 7.9 billion.
Bank of England data also showed that UK lenders approved 81,300 mortgages in June, up from 86,900 in May and the lowest since July 2020, the month the tax cuts first took effect.
A Reuters poll of economists showed that the number of approved documents increased to 86,100 in June.
Under a tax incentive scheme – part of Treasury Secretary Rishi Sunak’s emergency economic support – the first £ 500,000 ($ 697,750) of 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.
The Bank of England said UK consumer borrowing rose marginally in June as the economy continued to recover from a lockdown in early 2021, but growth was weak compared to pre-pandemic growth.
Unsecured consumer lending increased by £ 300 million, below the average monthly borrowing of £ 1.2 billion in the 24 months to February 2020.
A Reuters survey of economists showed an increase of 600 million pounds in June.
(1 dollar = 0.7163 pounds)
Reporting by William Schomberg, editing by David Millikan
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