Lending to UK consumers rose last month while approvals for mortgages fell, latest Bank of England figures reveal.
Mortgage approvals for house purchases fell to 51,098 in May, slightly lower than April’s 51,627 and down substantially from a 25-month high of 58,572 in January.
The number of loan approvals for remortgaging also fell in May to 29,244, to below the previous six-month average of 30,445.
Dr Howard Archer, chief UK and European economist at IHS Global Insight, said housing market activity is persistently low compared with long-term norms.
“While it may eventually be lifted by more mortgages being granted at decent interest rates under the ‘funding for lending’ scheme recently announced by the Bank of England and the Treasury, this is unlikely to be a major factor in the near term at least,” he said.
He added that there was still a “significant danger” house prices could fall even further due to the serious downside risks to the UK economic outlook, particularly stemming from ongoing problems in the Eurozone.
Meanwhile, new unsecured lending rose by £732 million in May compared with the previous six-month average of £403 million, pushed by mainly by increased overdrafts and loans, the Bank’s analysis indicates.
Within the consumer credit figures, credit card lending increased by £70 million.
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