(ShareCast News) - UK mortgage approvals fell more than expected in October, according to figures released by UK Finance.
The number of new home loans approved declined to 40,488 from 41,576 in September, missing expectations for a smaller drop to 40,900 and hitting their lowest level since September last year. Approvals were a little weaker than the monthly average of 41,447 over the previous six months and 3% lower than in October 2016
However, remortgaging approvals rose to 34,036 from 30,499, well up on the monthly average of 27,163 over the last six months and 36% higher than in October last year.
Figures from UK Finance also showed that credit card lending slowed to 5.1% last month from 5.5% in September.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said this appears to be just the start of a bigger downturn.
"New buyer enquiries fell in October at their fastest pace since July 2016, according to RICS. This signals that mortgage approvals likely will fall by a further 4K over the next two months. Note too that RICS and UK Finance data capture the period before the MPC hiked interest rates. Housing market activity likely has cooled further in recent weeks, given that mortgage rates have moved swiftly higher and consumer confidence has weakened since the MPC's hike.
"Meanwhile, the downturn in mortgage lending will gain a new lease of life from February, when mortgage rates likely will increase by around 25 basis points because new lending will no longer generate cheap funds for banks from the Term Funding Scheme. The Chancellor's decision to cut stamp duty for first-time buyers won't do much to counter this downturn, primarily because it will push up prices; the OBR estimates that the reform will create only 3,500 more transactions."