UK mortgage approvals edged up in February but remained more than a third below their levels from a year ago as high borrowing costs squeezed household spending, the Bank of England said.
Lenders last month approved a total of 43,500 mortgages for house purchases, up from 39,600 in January, the BoE said in a statement, above City expectations for a rise of around 41,300.
Approvals in February 2022 came to 69,131.
Samuel Tombs at Pantheon Macroeconomics said: "The continued weakness of house purchase mortgage approvals in February confirms that buyers are waiting for affordability to improve, either via a large correction in house prices or a larger fall in mortgage rates than seen to date, before re-entering the market.”
But the BoE said that net mortgage lending to individuals decreased from £2.0 billion to £0.7 billion in February which, excluding the pandemic, was the lowest level of net borrowing since April 2016 (also £0.7 billion).
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 36 basis points, to 4.24% in February.
Consumers borrowed an additional £1.4 billion in consumer credit in February, on net, compared with £1.7 billion borrowed during January.
This was split between £0.6 billion of borrowing on credit cards and £0.8 billion of borrowing through other forms of consumer credit.
Households deposited an additional £1.6 billion with banks and building societies in February. Within this, net flow into time deposits remained strong at £6.8 billion, but this was largely offset by net withdrawals from sight deposits.