Rate-cut chances dimmed as home loans total climbs

STRONG mortgage lending figures today gave the Bank of England yet more reason to hold fire on an interest-rate cut to 0.1% this week.

Home loans picked up from an August lull with 62,932 deals for house purchase approved in September, its figures showed.

That was 3% ahead of the previous month and the highest level since June — so far defying predictions from the Bank of a fall in approvals to around 56,000 a month at its last Inflation Report in August.

Business lending remained buoyant, with £1 billion lent to companies overall and growth in credit to small business at its highest rate since records began in 2012.

But there were the first hints of retrenchment among consumers as annual loan growth eased from 10.7% to 9.6% in the third quarter, marking the slowest growth this year.

The latest figures come days after official estimates showed the UK economy managed a surprisingly strong 0.5% advance between July and September, in the first full quarter after the Brexit vote. Capital Economics’ Scott Bowman said: “Overall, today’s data add to the evidence that the economy hasn’t slowed too significantly following the Brexit vote.”

The UK’s growth was faster than the 0.3% managed by the 19-member eurozone in the same period, the same pace as the April-June quarter.

The European Central Bank has been pumping €80 billion (£72 billion) a month into the economy in a bid to boost inflation and spur growth and is currently weighing whether to extend the stimulus programme beyond March 2017.

Inflation edged higher to 0.5% in October, but this remains well below the ECB’s inflation target of “close to 2%”.