Mortgages and business loans falling again

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Lending to home-buyers and businesses fell again last month, raising fresh concerns about Britain's economic recovery and heaping further pressure on the banks.

Mortgage approvals for house purchases made by Britain's six biggest lenders – Santander, Barclays, HSBC, Lloyds Banking Group, Nationwide and RBS – dropped to 48,000 in June from 51,000 in May, figures from the Bank of England showed.

Approvals peaked at 61,000 last November and have ranged from 48,000 to 51,000 per month this year, with the market remaining torpid and forecasts of falling prices as sellers flood the market.

The total stock of loans to British businesses fell by £2.3bn in May – the third consecutive monthly decline. There was a fall of £1.1bn in April, although in percentage terms the annual decline eased to 8.1 per cent from April's fall of 8.5 per cent.

Howard Archer, chief economist at IHS Global Insight, described the figures as worrying He said yesterday: "This is yet further evidence of housing market activity being muted and reinforces our suspicion that house prices are likely to fall by 3 to 5 per cent over the second half of this year – particularly as more houses coming onto the market has pushed the supply-demand balance away from sellers to buyers."