UK Economy

UK mortgage approvals rise near two-year highs ahead of buy-to-let tax

Estate agent signs are displayed outside residential properties in London, Britain January 23, 2016. REUTERS/Neil Hall

LONDON (Reuters) - British banks approved the highest number of mortgages in almost two years in January as some investors sought to snap up properties before a tax on buy-to-let properties due in April, industry figures showed on Wednesday.

The British Bankers’ Association said its members approved 47,509 loans for house purchase in January on a seasonally adjusted basis - its highest since February 2014. That was up from a seven-month low of 43,660 in December and 27 percent higher than the same time last year.

Net credit card lending rose by 262 million pounds in January, compared with a 64 million pounds increase in December.

“The start of the year has seen a significant rise in mortgage borrowing. It seems that this has been driven, in part, by borrowers looking to get ahead of the increases in stamp duty for buy-to-let and second home buyers scheduled to come into effect in April,” BBA chief economist Richard Woolhouse said.

Britain’s finance minister George Osborne announced in a budget statement in November that buy-to-let investors will have to pay a 3 percentage-point higher rate of stamp duty than residential buyers from April, as the government tried to cool a market that was heating up.

The BBA data do not include lending by Britain’s mutually owned building societies, but the figures serve as a good leading indicator for more comprehensive Bank of England figures typically released around a week later.

Reporting by Ana Nicolaci da Costa, editing by Andy Bruce