Mortgages approved by British banks declined for a second month and consumer credit dipped unexpectedly in June, data from the Bank of England showed Thursday.
The number of loans approved for house purchases in June was 47,643, down from 49,461 in May. The latest level was well below the previous six-month average of 50,036 and the expected 48,800.
The subdued picture of lending activity was reinforced today as mortgage approvals for house purchase recorded their largest fall for five months, said Paul Diggle, an economist at Capital Economics. "Although we doubt approvals will fall significantly further from here, we see little immediate prospect of a strong recovery either."
The British Bankers' Association on July 23 said mortgage approvals decreased to 34,813 in June from 36,418 in May. According to BBA, the abolition of Home Information Packs is expected to lead to more houses on the market but so far there has not been any impact on the number of house purchase approvals.
Earlier in the day, the Nationwide Building Society said house prices dropped in July for the first time since February as tight credit conditions and uncertainty over the future economic situation restricted potential home buyers from entering the market. House prices were down 0.5%.
The BoE report provided further evidence of weakening housing market activity, IHS Global Insight's Howard Archer said. The economist expects house prices to fall back over the latter months of 2010.
Approvals for remortgaging came in at 24,949 compared to May's 25,603. At the same time, approvals for other purposes totaled 24,849, broadly in line with May but below the previous six-month average of 25,069.
The decline in remortgaging reflects the lack of competition between lenders which means that moving from an expiring fixed or discounted rate mortgage to the same lender's standard-variable rate is often cheaper, once fees are taken into account, than swapping to a new deal, said Diggle at Capital Economics.
BoE data showed that total net lending to individuals increased by GBP 0.6 billion in June. The twelve-month growth rate was unchanged from a revised 0.8% in May. Within the total, net lending secured on dwellings grew by GBP 0.7 billion, which was slightly below the May increase of GBP 0.8 billion. Consensus forecast was for GBP 1 billion increase. Year-on-year, secured lending grew 0.9%.
Consumer credit fell GBP 0.1 billion in June, below the previous six-month average of an increase of GBP 0.2 billion and the May increase of GBP 0.3 billion. Economists were expecting a monthly rise of GBP 0.2 billion. On a yearly basis, consumer credit dipped 0.1%.
Elsewhere, Building Societies Association said in a report that gross mortgage lending by mutuals increased 19% year-on-year to GBP 1.79 billion in June. Gross lending in May amounted to GBP 1.5 billion.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.