UK mortgage lending slowed for the third straight month to an eight-year low in May. However, the outlook may be improving, data from the British Bankers' Association showed Tuesday.
Seasonally adjusted net mortgage lending grew £2.3 billion in May - - the smallest increase since March 2001 and compares with a revised £2.5 billion increase in April.
A year earlier, lending grew £4.0 billion, the BBA said. Net mortgage lending in April was originally reported as rising £2.7 billion.
Mortgage approvals rose for a second straight month to a 13-month high, indicating that the outlook may be improving. Mortgage approvals totaled 31,162 in May, the highest number since April 2008 and up from 29,018 in April.
Approvals also rose above year-earlier levels for the first time since November 2006, data from the BBA showed. In May 2008, approvals totaled 26,903.
BBA statistics director, David Dooks, said of the latest data: "Steady monthly increases since last November have seen the number of loans approved for house purchase recover to levels seen in early 2008, although gross and net mortgage lending show a subdued wider mortgage picture. However, unlike much of the mortgage market, the high street banks are still seeing lending growth and improved mortgage availability is reflected in higher average loan approval values.
"Consumers' borrowing appetite remains weak, reflecting uncertainty over household circumstances, so credit growth is negligible and spending activity on credit cards is down on this time last year. Lending to non financial companies was little changed overall in May."
On Monday, the UK Council of Mortgage Lenders announced that it cut its forecast for UK home repossessions, saying that record low interest rates are helping property owners pay their bills.
The number of repossessions this year will total 65,000, compared with a previous forecast of 75,000, the CML said in a statement. Net lending will fall by £5 billion, compared with a previous prediction of £25 billion.
The number of home loans in arrears will jump to 360,000 this year from 182,600 in 2008, the CML said. That would represent 3.24% of all mortgages.
The Bank of England cut its benchmark interest rate to 0.5% in March - - the lowest since it was founded in 1694.
