Home loan approvals hit seven-month high in March

The number of mortgage approvals hit a seven-year high as consumer borrowing rose, but consumer confidence and lending for house purchase fell, according to a mixed batch of data on the household economy yesterday.

The number of mortgage approvals hit a seven-year high as consumer borrowing rose, but consumer confidence and lending for house purchase fell, according to a mixed batch of data on the household economy yesterday.

UK lenders approved 91,000 loans last month, up from 84,000 in February and the largest number since August last year, the Bank of England said.

The Bank said consumer credit, which includes card purchases, bank loans and hire-purchase sales, rose £1.85bn, more than the £1.7bn rise expected by economists and above February's £1.64bn.

The figures will offset some of the concern of a marked slowdown in the housing market and on the high street since the start of the year. Actual mortgage lending was steady in March at £7.0bn against a forecast of £7.1bn and down a fraction on the previous month.

Ross Walker, at Royal Bank of Scotland, said the slowdown in lending should be seen in the context of annual growth of 12 per cent - twice the pace of nominal GDP growth and almost three times as fast as income growth. He said: "Taken together, the data suggest a degree of stabilisation in consumer borrowing and the housing market."

However, a survey of consumer confidence conducted in the first two weeks of April showed a drop in overall optimism and households' concerns for the economic outlook. The consultancy GfK Martin Hamblin said its barometer of consumer confidence fell in April to zero from plus one in March.

Britons' assessment of their economic situation over the next 12 months also deteriorated, with the confidence balance falling to minus six from minus four in March. Their perceptions of their own finances over the coming year dropped a point to plus 11.

Alan Castle, at Lehman Brothers, the investment bank, said: "These moves hint of some impact from the discussion of economic risks by politicians in the run-up to next week's general election."

He added that the slight fall in confidence was "neither here nor there" in terms of the Bank's next decision on interest rates.