British mortgage lending grew at the weakest pace since 2012 as a new tax on landlords took effect, and uncertainty about Britain’s future in Europe dampened other borrowing, too.
The Bank of England said net mortgage lending rose just £281m (€362m) in April, a fraction of the £3.8bn increase forecast in a Reuters poll of economists and down sharply from a £7.411bn increase in March.
This was the smallest rise since August 2012, while approvals for new mortgages in April — a bellwether for future property market activity — fell to 66,250 from March’s 70,305, their biggest drop in two years.
The new surcharge on the purchase of second homes and rental property introduced in April had clearly dented real estate lending, economists said, while concern about the June 23 vote on EU membership weighed on consumer and business lending.
“The adverse impact of uncertainty about the outcome of the EU referendum can be seen clearly across all the latest lending data,” Samuel Tombs, economist at Pantheon Macroeconomics, said.
Underlining doubts around Brexit, sterling slipped to a two-week low yesterday and the cost of hedging against sharp falls in the exchange rate over the next month rose to its highest in seven years.
And the OECD chopped its British economic growth forecast for 2016 to 1.7% from 2.1%, citing the uncertainty generated by the referendum. It repeated its warning that Britain would suffer a sharp slowdown if voters opted to leave the EU.
Separate data from mortgage lender Nationwide yesterday showed monthly house prices growth remained stuck at 0.2% in May, the joint weakest increase since November, while the annual rate of growth slowed to 4.7%.
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