Mortgage approvals fall to seven-month low as slowdown hits housing market

British lenders approved the lowest amount of mortgages in seven months in April, according to the latest data released by the Bank of England (BoE).

The number of loans approved by banks and building societies fell from a downwardly revised 66,043 in March to 64,645 last month, way short of forecasts for a reading in the 66,000 region.

Net mortgage lending, meanwhile, slowed down to its lowest level in a year, rising by £2.73bn last month, compared with consensus for an increase of £2.95bn. Unsecured lending also increased at a slower rate than in the previous month, while consumer credit rose by £1.52bn, in line with expectations but lower than the £1.61bn figure recorded in March.

"Today's figures will no doubt raise concerns about the sustainability of the recent acceleration in nominal spending growth," said Paul Hollingsworth, UK economist at Capital Economics.

"However, if, as we expect, inflation starts to drop back after peaking later this year, and nominal wage growth picks up a bit of momentum, then stronger real wage growth next year should pave the way for more sustainable growth in consumer spending."

The latest data is in line with figures suggesting British households have reined in their spending, amid rising inflation and growing uncertainty surrounding next week's General Election. Consumer spending has been one of the main drivers of the UK economy and held steady even in the aftermath of last June's Brexit vote.

A separate report released on Wednesday (31 May) showed confidence among UK consumers improved in May to its highest level in four months, despite concerns over rising inflation and the economic outlook.

GfK's consumer confidence index rose to -5 from -7 in April, coming in above expectations for a score of -8.

Meanwhile, data from the BoE also showed the rate of growth in consumer borrowing stood at 10.3% in April, slightly higher than in the previous month and close to the 10.9% recorded in November 2016, which represented an 11-year peak.

Net credit card borrowing rose from £517m to £606m, the highest level in over a year.