Mortgage approvals pick up but consumer loans lose pace

Marion Dakers
LENDERS approved the highest number of mortgages since May 2010 last month, but growth in consumer borrowing slowed more severely than expected, according to Bank of England figures.

The Bank said 49,239 mortgages were approved in July, rising from an upwardly revised 48,500 in June.

Gross lending secured on dwellings stood at £11.3bn last month, in line with the six-month average.

“It’s difficult to get too excited about the pickup in mortgage approvals. Although this might have been a 14-month high, it’s still very low in a historical context and the market remains essentially stagnant. Similarly, lending levels remain just a fraction of long-term averages,” said Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club.

And consumer credit rose by just £200m last month, compared with a £400m gain in June, and lending through credit cards rose by £300m.

“Although the data contain some signs that credit supply to households is improving, heightened uncertainty about the economic outlook means lenders are likely to remain cautious,” said Simon Hayes at Barclays Capital.