British mortgage approvals unexpectedly fell in December, the first drop since November 2008, suggesting the last year's rebound in the housing market may be petering out, though there was a surprise increase in consumer lending, Bank of England figures showed on Monday.
The BoE said mortgage approvals numbered 59,023 in December, down from 60,045 in November and below analysts' expectations for a rise to 62,000.
The net rise in mortgage lending also slowed to 1.165 billion pounds from 1.551 billion, confounding forecasts for a rise to 1.55 billion.
"It does suggest the recovery in approvals may be starting to stabilise," said George Buckley, UK economist at Deutsche Bank. "We will probably see more improvements in 2010 but not at the same speed as in the second half of 2009."
However, unsecured consumer credit showed its first monthly rise since June 2009, increasing by 52 million pounds against for a fall of 400 million.
"Consumer lending is very hard to forecast," said Buckley. "It can be quite volatile."
For a graphic of UK consumer credit and mortgage lending, click:
http://graphics.thomsonreuters.com/0210/UK_CCML0210.gif
There was little market reaction to the figures as investors focused on an unexpectedly strong manufacturing PMI survey released just before the BoE data, which suggested activity in the sector expanded at its fastest pace in 15 years. [nLAG006082]
Separate figures showed the BoE's preferred money supply gauge — M4 excluding intermediate other financial corporations — returned to negative territory, and the headline M4 measure fell at its fastest monthly pace since records began in 1982.
However, Buckley said it was hard to interpret what the figures meant for the amount of credit available to firms and consumers.
"It could just mean that pensions funds are dumping cash and buying risky assets, which would be a good thing," he said.
Britain's central bank has completed its 200 billion pound quantitative easing programme, designed to boost credit flows and help kick-start growth and most analysts reckon policymakers will vote to pause the programme this week.
