UK housing market slowed noticeably in January, Bank of England data shows

Bank of England Data Reveals Trends in Mortgages and Consumer Credit

Mortgage Approvals and Lending Activity

LONDON, March 2 (Reuters) - The number of mortgages approved by British lenders for house purchase unexpectedly fell in January to their lowest in two years, according to data from the Bank of England on Monday that also showed consumer credit grew at a faster pace.

Mortgage approvals fell to 59,999 in January from 61,007 in December, the lowest since January 2024, and confounding the median forecast in a Reuters poll of economists for a rise to 62,000.

Value of Mortgage Lending

The value of mortgage lending, which lags behind approvals, rose by the smallest amount since May 2025 - up 4.076 billion pounds ($5.5 billion) in net terms January following a rise of nearly 4.5 billion pounds in December.

House Prices and Market Reactions

Nationwide Data on House Prices

But separate figures from mortgage lender Nationwide, published on Monday, showed house prices rose more than expected last month after a blip at the end of 2025 linked to uncertainty over finance minister Rachel Reeves' budget.

Consumer Credit and Economic Outlook

Growth in Consumer Borrowing

The BoE data showed net consumer borrowing rose by 1.8 billion pounds in January, above the 1.7 billion-pound forecast in the Reuters poll of economists.

Expert Commentary

"The pickup in consumer credit adds to other evidence that suggest economic activity strengthened in January, Ruth Gregory, deputy chief UK economist at Capital Economics, said.

However, Gregory said there were downside risks from an inflationary shock from the conflict in the Middle East.

"The growing risk is that an inflationary shock from the event in the Middle East limits interest rate cuts and puts a handbrake on growth this year," Gregory said.

Bank of England Policy and Forecasts

The Bank of England last month downgraded its forecast for economic growth this year to 0.9% from 1.2% in November, and expects inflation to drop back to close its 2% target in April.

The BoE held interest rates at 3.75% in February, and investors are betting that the central bank will reduce borrowing costs in one or two further quarter-point moves to 3.25% by the end of the year.

Additional Information

($1 = 0.7482 pounds)

(Reporting by Suban Abdulla, editing by Andy Bruce)