April 30, 2013 / 8:36 AM / 6 years ago

Mortgage approvals rise more than expected in March

Construction workers build a new residential property development in north London, March 21, 2013. REUTERS/Neil Hall

LONDON (Reuters) - British mortgage approvals for house purchase bounced back more strongly than expected in March, in a further sign homebuyers are benefiting from the central bank’s flagship credit scheme.

Lending to businesses fell last month, but at a slower pace than in February, Bank of England data showed on Tuesday.

The central bank has been hoping that its Funding for Lending Scheme (FLS), opened in August and revamped last week, will boost the flow of credit to households and businesses, thus easing what it sees as a major drag on the economy.

Mortgage approvals numbered 53,504 in March, up from 51,947 in February and a thousand more than analysts had forecast.

Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000, but the number of home sales has slumped since then and is only slowly starting to recover.

Lending to non-financial businesses shrank for a second straight month, by a net 0.6 billion pounds. Within that, lending to smaller firms dropped by 0.1 billion pounds, erasing the previous month’s gain.

Last week the central bank and the finance ministry retooled the FLS, giving banks greater incentives to lend to small and medium-sized firms which complain they are starved of credit.

The BoE’s preferred gauge of money supply, M4 excluding intermediate other financial corporations, rose 0.3 percent, taking the annual growth rate to 4.5 percent.

Reporting by Olesya Dmitracova and Christina Fincher

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