ECONOMIC OUTLOOK
UK MORTGAGE activity seemed to have entered into seasonal decline according to a survey from a leading business group.
According to the Council of Mortgage Lenders, home-buyers borrowed £8.4bn in January, unchanged from a year ago but 28% less than in December.
In terms of volumes, mortgages were 1% ahead on the year-ago mark at 45,700 loans, but off by 28% versus the prior month.
CML director general Paul Smee commented: “January gives the impression of a flattish market overall, albeit one with a resurgent remortgage sector. We expect a seasonal dip in activity in the winter months and this appears to be the case in January. However, the lull in moving activity appears stubbornly persistent.”
Across Britain, newly agreed rents were 0.6% lower in February than a year earlier – the first annual drop since 2010 – with the biggest reductions in London and south-east England, down 4.7% and 2.6% respectively. But Wales saw higher growth than any other region, with an increase of 5.3%.
Countrywide research director Johnny Morris said the overall decline in rents reflected a surge in the number of rental properties last year ahead of a 3% stamp duty surcharge for landlords.
The annual rate of house price growth slowed to 5.1%, its lowest since 2013, according to the latest Halifax house price index.
Halifax housing economist Martin Ellis said: “The annual rate of growth fell to 5.1% from January’s 5.7% and has nearly halved over the past 11 months. A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth.”
The Budget contained an upgraded forecast of 2% growth for 2017 from the Office for Budget Responsibility (OBR). The OBR’s previous estimate was for growth of 1.4% in 2017. However, the forecast for 2018 has been cut from 1.7% to 1.6%.
The Government deficit is expected to be £51.7bn for 201617, compared to the £68.2bn previously forecast, though it is forecast to rise next year to £58.3bn.
The Chancellor came under fire for his plan to increase National Insurance Contributions for millions of self-employed. A move to cut the tax-free dividend allowance from £5,000 to £2,000 a year from April 2018 will hit self-employed people who “incorporate” (work through their own companies) as well as wealthier investors.
UK industrial output shrank by 0.4% in January following growth in the previous two months, according to the Office for National Statistics. Manufacturing output declined by 0.9%, while mining and energy increased.
The UK’s trade deficit was £2bn in January, unchanged from the previous month’s revised figure. Exports rose by £400m while imports grew by £300m.