London, United Kingdom. British lenders approved the most mortgages in four months in March while consumer lending grew at the fastest annual rate in over two years, Bank of England data showed, indicating resilience in the economy at the start of the Iran war.
Mortgage approvals rise against expectations
The number of mortgages approved for house purchase, a leading indicator for home sales, rose to 63,531 in March from 62,708 in February. It was the highest number since November and contrasted with economists’ expectations in a Reuters poll for a fall.
Unsecured lending growth accelerates
Net unsecured lending to consumers increased by 1.895 billion pounds ($2.58 billion) in March, slightly less than in February but above economists’ forecast of a 1.75 billion pound rise. The data showed the fastest annual credit growth since January 2024, at 8.9 per cent.
Mixed signals for the housing market
A drop in consumer confidence since the start of the Iran war and the prospect of higher mortgage rates led property surveyors and mortgage lender Halifax to report falling prices and lower buyer demand in March. In contrast, Nationwide Building Society figures showed house prices continued to rise modestly in April, increasing by 3.0 per cent from the same month in 2025.
Rate outlook and mortgage costs
Rob Wood, chief UK economist at Pantheon Macroeconomics, questioned how long the trend would continue. He said that if the Bank of England raised borrowing costs as markets expect, the interest rate on a new two-year fixed-rate mortgage at 75 per cent loan-to-value was set to rise to 4.8 per cent in the coming months, from 4.5 per cent now and 3.9 per cent at the start of the year. Wood said he expected house price inflation of 1.0 per cent in the fourth quarter of 2026.
BoE policy stance
The Bank of England last week kept interest rates unchanged at 3.75 per cent. Governor Andrew Bailey said there was a range of possible paths for interest rates depending on how long the Strait of Hormuz remained closed, and that he would not push back against market expectations for two quarter-point rate rises this year.
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