Mortgage loans hit a nine-month high

Lenders shrugged off Brexit uncertainty on Friday as mortgage loans hit a nine-month high in the month that the UK was supposed to leave the European Union.

Industry data from the UK Finance industry body showed High Street banks approved 39,980 mortgages in March, up 6% on a year ago and 2% ahead of the previous month.

While consumers remain cautious over big-ticket purchases, “it may well be that housing market activity has gained some support from recent improved consumer purchasing power and robust employment growth,” according to the EY Item Club’s Howard Archer.

Annual wage growth is currently close to 10-year highs while unemployment is at a 44-year low of just 3.9%.

That said, other experts don’t expect the impetus to be sustained as a potential EU exit on October 31 hangs over the market.

Capital Economics property economist Hansen Lu said: “Looking ahead, the delay to Brexit suggest that demand and sentiment in the housing market will stay subdued for at least the next few months. As a result, we don’t expect to see a further recovery in mortgage approvals this year. At the same time, a no-deal Brexit looks less likely than before.”

Brexit uncertainty had more impact on manufacturers as stockpiling grew at a record pace according to the CBI’s latest industrial trends survey. Growth picked up slightly but manufacturers expect output volumes to be broadly flat in the next three months.

Rain Newton-Smith, the CBI’s chief economist, said: “UK manufacturing activity is just about holding up, but the unprecedented pace of stockpiling suggests that Brexit contingency planning stayed at the forefront of manufacturers’ minds.”