There was better news for the housing market, however, with mortgage approvals rising for the first time since November and lenders expecting further improvement.
The flow of net lending to businesses fell by £0.8bn in February, the third consecutive monthly fall but a marked improvement on January’s drop of £6.9bn, the BoE said in its Trends in Lending report.
That lifted the annual rate of decline to 9.2 per cent from January’s 9.4 per cent which was the biggest since monthly records began in 1999.
Mortgage approvals for house purchase made by Britain’s six biggest lenders – Santander, Barclays, HSBC, Lloyds Banking Group and Nationwide – rose to 52,000 in March from 48,000 in February, recording the first monthly rise since November.
“Most major UK lenders reported that effects from the severe weather around the turn of the year and the removal of the stamp duty relief at the year end had dissipated and were not affecting approvals or lending in March,” the BoE report said.
Moreover, lenders said they expected some positive impact on mortgage demand from first-time homebuyers following tax changes announced in the government’s Budget last month.
“Housing market activity has lost momentum overall so far in 2010,”?said Howard Archer, economist at IHS Global Insight.