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UK mortgage lending saw record surge before tax deadline – Bank of England

Economy1 hour ago (Jul 29, 2021 05:40AM ET)

(C) Reuters. FILE PHOTO: Terraced houses are seen in Primrose Hill, London, Britain September 24, 2017. REUTERS/Eddie Keogh

By William Schomberg

LONDON (Reuters) -British mortgage lending surged by a record amount in June as home-buyers rushed to take advantage of a tax break before it was scaled back, Bank of England data showed on Thursday.

Mortgage borrowing rose by a net 17.9 billion pounds ($25.0 billion) from May, the biggest monthly increase in records which date back to 1993.

That increase added to signs of how the tax incentive fired up Britain’s housing market, which was already being boosted by rising demand for bigger properties as more people worked from home because of the coronavirus pandemic.

A Reuters poll of economists had pointed to a much smaller net increase of 7.9 billion pounds.

The BoE data also showed British lenders approved 81,300 mortgages in June, down from 86,900 in May and the lowest figure since July 2020, the month when the tax cut first took effect.

The Reuters poll of economists had pointed to a stronger figure of 86,100 for approvals in June.

Under the tax incentive scheme – part of finance minister Rishi Sunak’s pandemic emergency support for the economy – the first 500,000 pounds ($697,750) of any property purchase in England or Northern Ireland were exempt from stamp duty until the end of June.

A 250,000 pound tax-free allowance is now running until the end of September.

The BoE said borrowing by British consumers rose slightly in June as the economy extended its recovery from an early 2021 lockdown, but the increases were weak compared with pre-pandemic growth rates.

Unsecured lending to consumers increased by a net 300 million pounds, below the 1.2 billion-pound average monthly borrowing in the 24 months to February 2020.

A Reuters poll of economists had pointed to a rise of 600 million pounds in June.

($1 = 0.7163 pounds)

UK mortgage lending saw record surge before tax deadline – Bank of England

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