MORTGAGE approvals slumped to their lowest level in nine months in February, lending data from the Bank of England showed yesterday, providing further evidence that the recovery in the housing market may be running out of steam.
The number of mortgages approved fell for the second consecutive month to 47,094 – the weakest since May 2009. Encouragingly, gross mortgage lending inched higher to £1.6bn in February.
Although the February data might be artificially weak following the poor weather and the end of the previous stamp duty holiday, Ed Stansfield, chief property economist at Capital Economics, said: “Today’s mortgage lending data do not inspire confidence that last year’s housing market recovery will be extended this year.”
But while the housing market news was gloomy, there were signs yesterday in the Bank’s lending data that consumers are marginally more prepared to borrow.
Net consumer credit rose by £528m in February, the largest monthly increase since November 2008. Credit card lending increased by £0.4bn and other loans rose by £0.2bn.
The annual growth of consumer credit rose to 0.2 per cent while the annualised quarterly growth rate increased to 2.1 per cent.
However, consumer demand for credit remains historically low and households are still preferring to reduce their debts in the face of an uncertain economic environment ahead of the general election and still-limited availability of credit from banks.