mw: U.K. mortgage lending, approvals fall back in May
By Ilona Billington
LONDON--U.K. mortgage lending grew at a slower pace in May than April while approvals for new home loans fell for a fourth straight month, data showed Tuesday, in a further sign that the booming housing market could be beginning to cool.
Other figures also showed that non-financial firms borrowed more than they repaid from banks in May for the first time in eight months.
The British Bankers Association's monthly high street banking survey reports net mortgage lending grew by 1.2 billion pounds ($2.04 billion) in May, down from April's GBP1.3 billion increase.
Mortgage approvals totaled 41,757 in May, down from 41,934 in April to the lowest level since August.
"Our figures indicate that the heat appears to be coming out of the housing market," said the BBA's chief economist Richard Woolhouse. "These are the first mortgage approval figures we have seen since the introduction of the Mortgage Market Review, so it is significant they have fallen for the fourth month in a row."
The figures follow news Monday from the Bank of England that while demand for mortgages rose in the second quarter and is expected to increase again between July and September, lenders intend to keep the availability of mortgage funds unchanged in the third quarter.
The findings of the central bank's quarterly credit conditions survey along with the BBA figures suggest lenders are tightening up their mortgage lending rules as the housing market gathers pace and more potential home-buyers are unable to afford the increased cost of a property.
That should be welcome news to the central bank, which was handed new powers by Chancellor of the Exchequer George Osborne just over a week ago allowing it to limit the amount home buyers can borrow relative to their incomes and as a proportion of a property's value.
The BBA survey also showed that non-financial businesses borrowed GBP1.0 billion in May, the first time firms have borrowed more than they repaid since September. In April, there was a net repayment of GBP2.2 billion.
Write to Ilona Billington at ilona.billington@wsj.com
