UK Mortgage Approvals Lose Momentum

February was the slowest month for mortgage approvals in the UK since October 2013, according to the Bank of England.

The BoE said 70,309 mortgages were approved in February, a sharp decline from January's 76,753.

Analysts had predicted a slight fall, but not by over 6,000, as heavy rain and flooding in parts of the country were said to have had a detrimental effect on business.

Despite mortgage approvals being relatively strong in comparison to the last few years, they are still short of the 90,000 per month that was the norm before the financial crisis.

Despite this, house prices are rising rapidly, up around 10% on 2013.

With the financial crisis still fresh in the mind of many, the Bank of England has urged banks to consider the risk of future spikes in interest rates when approving mortgages. It is preparing tools to reign in any potentially dangerous lending.

The BoE considers any mortgage that is worth more than 3.5 times a single person's income or 2.75 times a joint income a high income multiple. Statistics show that one in five buyers are taking out mortgages that fall into these brackets.

Mark Carney, governor of the BoE, has dampened suggestions that the housing market is overheating.

2013 was the strongest year for Britain's economy since the financial crisis, with the recovery largely lifted by the housing and consumer sector.

But there have been signs that suggest trade and business investment are also starting to pick up.

The BoE refocused its Funding for Lending Scheme away from mortgage lending and channelled it exclusively to business credit at the start of 2014.

Business lending was reduced by £750m (€907m, $1.2bn) in comparison to the previous month, but this was at a slower pace of decline than January.