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UK Mortgage Applications Fall

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UK Mortgage Applications Fall

In addition to the retail sales data this morning the British Bankers Association took the opportunity to publish Mortgage Approval figures for the month of March. These showed that 45.9k new approvals were issued during the month, down slightly on the February number of 47.6k and missing the 48.9k consensus estimate.

It is hard to see this fall in the Mortgage Application numbers as anything other than a blip in the upward trajectory of the British economy. The housing market is undoubtedly powering ahead in the regions of the UK, particularly urban centres and the southeast of the country, there are regional disparities that are yet to be addressed but these areas are nonetheless also experiencing a moderate growth pattern.

Britain has reported a full 1% growth in GDP for the first quarter of 2014, the first time this has happened since pre-crises 2007. The Bank of England has also noted that there are signs of a pick up in manufacturing investment, an area that has been troubling observers as having been somewhat neglected during the early stages of this recovery. Additionally, the Chancellor, George Osbourne, looks set to hit his target for a reduction in the current account deficit.

The UK appears to be well on track towards a full and rapid recovery from the economic crises. It is difficult to see where the pitfalls lie as all economic indicators continue to point in the right direction. There is however a looming inflationary problem driven by relentless increases in house prices, the fact is that Britain escaped a housing collapse during the crises due to the rapid monetary easing reaction from the Bank of England. It is this loose monetary policy and the Banks reluctance to reverse it that is fuelling further house price growth, it is a fine balancing act but the Bank of England will have to soon address the dilemma of sacrificing growth in exchange for stability.

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