U.K. mortgage approvals dropped in May, reflecting the ongoing subdued activity in the housing market, official data showed Tuesday.
A separate survey indicated that construction activity contracted at the fastest pace in two-and-a-half years in June with a sharp fall in output.
The number of mortgages approved for house purchases fell slightly to 51,098 from 51,627 in April, the Bank of England said. Nonetheless, approvals for May exceeded the consensus forecast of 50,000.
As mortgage approvals hover around 50,000 since January, underlying housing market activity remains weak, said IHS Global Insight's economist Howard Archer. Given the ongoing muted mortgage activity, he expects house prices to drift lower over the second half of 2012.
Lending to individuals rose by GBP 1.3 billion in May or 0.1 percent from the prior month. Likewise, lending secured on dwelling increased GBP 0.6 billion, but below the expected level of GBP 1 billion. On a monthly basis, secured lending remained flat, but rose 0.8 percent annually.
The monthly increase in consumer credit was GBP 0.7 billion or 0.4 percent in May. On an annual comparison, net consumer credit climbed 2.4 percent.
The central bank also reported that M4 money supply declined by 0.1 percent month-on-month in May, following a 0.9 percent rise in April. Annually, money supply dropped 4.1 percent, slightly faster than the 4 percent decline in the previous month.
Elsewhere today, Markit Economics announced that the CIPS Construction Purchasing Managers' Index fell to 48.2 in June from 54.4 in May. A reading below 50 indicates contraction in the sector. Civil engineering and housing activity were the worst performing broad areas of the construction sector.
Data signaled a moderate drop in new work received by construction firms. Also, there was a marginal fall in workforce since February. Driven by weak new orders, input buying declined in June. Still, firms in the construction sector expect an increase in activity over the coming twelve months.
by RTT Staff Writer
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