The hesitation in the housing market would not reduce the pressure for a rise in base rates, analysts said. The latest batch of monetary statistics showed that broad money growth, which has alarmed the Bank of England, was still well above target and accelerating.
New lending by building societies dipped to pounds 995m in March from pounds 1.1bn the previous month. It is at the same level as a year ago. The amount approved in March was slightly down on a year earlier and the number of approvals were the same as in March 1996.
The high street banks also reported a slight dip in mortgage lending from pounds 780m to pounds 755m. But this remained 21 per cent higher than a year earlier and well above the recent monthly average, suggesting the banks gained market share last month.
Adrian Coles, director general of the Building Societies Association, said the housing market recovery remained on track. But, he said: "It is worth noting that the recovery remains moderate and that spring is traditionally a time when the housing market picks up."
Jonathan Loynes, an economist at HSBC Markets, said: "Mortgage demand has slackened in the run-up to the election. People are worried about where mortgage rates are going."
Other bank lending was stronger than expected, although not as high as the monster totals for January and February. Total lending by banks and building societies was pounds 4.5bn in March, down from pounds 7.8bn the previous month.
The picture was complicated by transactions in the gilts repo market. Last month there seems to have been a repo-related repayment of loans to overseas banks.
The British Bankers' Association reported a pounds 5.6bn increase in its lending last month, the highest since its figures began in 1991. Much of the increase was new lending to financial companies, especially securities dealers.
Personal lending remained above pounds 1bn but was down from February's record pounds 1.4bn. Credit card lending was half the previous month's level, at pounds 115m.
Separate figures showed a dip in consumer confidence in April. The monthly survey for the European Commission by GfK showed less optimism about household finances and the general economic situation.Reuse content