April 2, 2013 / 8:36 AM / in 7 years

Consumer credit rises, mortgage approvals fall

LONDON (Reuters) - Lending to Britain’s consumers ticked up February while the number of mortgage approvals for house purchases fell for a second month, Bank of England data showed on Tuesday.

Loans to small businesses, excluding financial firms, posted their strongest rise since June of last year, climbing by 114 million pounds, the data showed.

A rise in the flow of credit in recent months, particularly in home loans, has fed hopes that the central bank’s flagship Funding for Lending Scheme is working.

Consumer credit rose by a net 0.6 billion pounds in February, higher than a 0.5 billion-pound increase in January.

Mortgage lending grew by 0.9 billion pounds in February, stronger than January’s growth of 0.3 billion pounds, the data showed.

Analysts polled by Reuters had expected a 0.3 billion-pound increase in consumer credit and a 0.4 billion-pound rise in mortgage lending.

The BoE said mortgage approvals numbered 51,653 in February, the lowest since September of last year and down from 54,187 in January. Analysts had forecast a reading of 54,000.

Approvals in February were slightly better than the monthly average of around 51,000 seen last year, but still just over half the level typical before the 2008 financial crisis.

Similar data from the British Bankers’ Association, released in March, showed a 6.3 percent fall in mortgage approvals in February compared with a year earlier, as well as a drop compared with January.

The BoE’s preferred gauge of money supply, M4 excluding intermediate other financial corporations, fell 0.3 percent on the month after a 1.0 percent increase in January, taking the annual growth rate to 4.9 percent.

Reporting by William Schomberg and Olesya Dmitracova

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