UK mortgage approvals hit nine-month high in March

UK mortgage approvals rose more than expected in March, to their highest level in nine months, according to figures released by UK Finance on Friday.

Mortgage approvals increased to 39,980 last month from 39,207 in February, coming in above consensus expectations for a level of 38,700.

The data also showed that lending to consumers grew 4.1% in March, up from 3.5% in February and marking the best rate of growth since June.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the rise in mortgage approvals is another sign that Brexit uncertainty has had little adverse impact on households' spending decisions.

"Survey measures of housing market activity have plunged recently - for instance, the RICS survey has been consistent with a 25% fall in the level of mortgage approvals - but they appear to have been excessively influenced by respondents’ sentiment.

"Looking ahead, mortgage lending likely will continue to flatline. Banks expect to keep the supply of secured credit to households unchanged in Q2, according to the latest Credit Conditions Survey. In addition, mortgage rates look set to hold steady, keeping the proportion of homebuyers’ incomes absorbed by loan payments at historically low levels.

"Nonetheless, households’ overall confidence still is low and surveys show a marked deterioration in households’ view that housing is a good investment, which only will have been strengthened by the recent slowdown in house price growth. It's hard to see lending returning to 2013-to-15 levels any time soon."

Howard Archer, chief economic adviser at the EY Item Club, said: "The mortgage approvals data looks pretty resilient given recent heightened Brexit uncertainties. It may well be that housing market activity has gained some support from improved consumer purchasing power and robust employment growth."