LONDON (Reuters) - British mortgage approvals unexpectedly picked up in January from a series low, but mortgage lending posted its weakest rise in two and a half years, according to Bank of England data on Friday.
By Matt Falloon and Alastair Sharp
LONDON (Reuters) - British mortgage approvals unexpectedly picked up in January from a series low, but mortgage lending posted its weakest rise in two and a half years, according to Bank of England data on Friday.
The BoE said there were 74,000 mortgage approvals for house purchases last month, up from a downwardly revised 72,000 in December. December's figure was the lowest since current records began in 1999.
Analysts had expected a further fall to 70,000 and the surprise pick up in the forward looking indicator for the housing market brings an end to a run of seven months of declines.
!ADVERTISEMENT!"January's household borrowing figures suggest that housing market activity has stabilized, at least temporarily," said Vicky Redwood, an economist at Capital Economics.
The Bank of England is expected to hold fire on further interest rate cuts until the middle of the year, having cut borrowing costs earlier this month, but rates may have to come down sooner if the economy deteriorates sharply.
Many analysts believe the housing market will weaken further this year as the global credit crunch starts to feed through to households.
Indeed, mortgage lending posted its weakest rise since July 2005, up 7.416 billion pounds ($14.7 billion) in January, compared to a rise of 7.915 billion in December. Analysts had forecast a rise of 8.1 billion pounds.
Mortgage lending also rose at its weakest annual rate since October 2001, up 9.7 percent.
"Demand for, and supply of, credit in the UK mortgage market remains very weak and is set to ease further going forward," said George Buckley, an economist at Deutsche Bank.
Figures from the Nationwide building society on Friday showed further weakness in the market, with prices falling 0.5 percent on the month in February, taking the annual rate down to 2.7 percent -- the weakest since November 2005.
The BoE said consumer credit rose more than economists had forecast, up 0.94 billion in January, picking up from December's 0.59 billion rise.
And final M4 money supply grew 1.4 percent on the month in January and 13.1 percent on the year.
