LONDON (Reuters) - Lending to firms contracted for a third consecutive month in May and major banks approved fewer mortgages in June, according to figures from the Bank of England that provide further evidence the housing market is flagging.
Mortgage approvals for house purchase made by Britain’s six biggest lenders — Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and RBS — dropped to 48,000 in June from 51,000 in May. Approvals peaked at 61,000 last November and have ranged from 48,000 to 51,000 this year.
“It is disappointing to see a downturn in approvals,” said David Page, an economist at Investec. “It suggests the housing market will remain lacklustre for some months to come.”
Total M4 money supply was unchanged in June, with the annual rate picking up to 3.0 percent from May’s downwardly revised 2.7 percent. May’s reading was the lowest since current records began in 1983.
The total stock of loans to British businesses dropped by 2.3 billion pounds in May after a fall of 1.1 billion pounds in April, the BoE said in its monthly “Trends in Lending” report.
However in percentage terms the annual decline eased to 8.1 percent from April’s fall of 8.5 percent.
The report suggested demand for credit remained muted, and lenders expected corporate demand to stay subdued in the coming months.
The Bank of England has highlighted weak lending as a major potential brake on a sustainable recovery and has kept interest rates at a record low of 0.5 percent for more than a year.
Reporting by Tim Castle and Christina Fincher; editing by John Stonestreet