Last month 49,815 loans were approved – marginally down from April and well below the 51,000 forecast by economists.
However, mortgage lending picked up more strongly than expected, rising to £1.184bn from £0.979bn in April – a figure that was sharply upwardly revised from an initial estimate of£0.490bn.
Consumer credit also rose faster than expected to £331m in May from a net repayment of £114m in April. However credit card lending posted its weakest reading since September 2009.
Analysts had forecast a rise in unsecured lending of £0.1bn, with mortgage lending seen up by £0.8bn.
Howard Archer of global Insight said: "On balance, we believe that house prices are likely to be erratic over the coming months and at best will make very modest gains over the rest of the year. Indeed, we would not be surprised if they were only flat overall through the rest of 2010."