U.K.'s mortgage approvals reached a ten-month high in March suggesting an improvement in the housing market, a Bank of England report revealed Friday. However, the growth in overall net lending to individuals hit a record low.
Mortgages approved in March totaled 39,230, larger than February's 37,716 and the six month average of 32,473. But it stood below the expected level of 40,000. Approvals for remortgaging came in at 31,746, higher than in February.
Overall lending to individuals increased GBP 885 million in March, lower than February's increase of GBP 1.5 billion and the previous six-month average. The increase seen in March was the lowest since records began in 1993.
Meanwhile, the increase in net lending secured on dwellings was GBP 0.8 billion compared to GBP 1.4 billion last month. Annual growth eased to 2% from 2.4% in February. The three-month annualized growth rate also fell by 0.4 percentage points to 1%.
Further, the central bank said consumer credit increased a net GBP 0.1 billion, unchanged from revised February figures, but below the previous six month average. While net credit card lending grew GBP 0.3 billion, net other loans and advances dropped GBP 0.1 billion.
The Building Societies Association's calculation also showed an increase in mortgage approvals during March. Mortgage approvals by building societies in March were GBP 1.54 billion compared to GBP 742 million in February.
Even adjusting for seasonal influences this is the highest figure since November, Adrian Coles, Director-General of BSA said. Net lending was minus GBP 717 million versus GBP 781 million logged during the same period of last year.
The Bank Rate was reduced to 0.5% at the beginning of March, and the figures show the impact of low interest rates and economic conditions on people's ability and willingness to save, Coles added.
Elsewhere, reports on the U.K. PMI suggested improvement in the manufacturing sector in April. Reports said citing data from the Markit Economics that the CIPS/Markit Purchasing Managers' Index, or PMI, climbed to 49.2 from a revised 39.5 in March.
A PMI reading above 50 indicates expansion in the sector, while a 'sub-50' reading suggests contraction. The pace of decline in activity in April was the slowest in 8 months, with the April reading marking the highest since August 2008.
According to Insolvency Service, there were 4,941 compulsory liquidations and creditors' voluntary liquidations in England and Wales during the first quarter of 2009. This represents a 7.1% increase over the previous quarter and a 56% year-over-year growth.
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