UK lending to individuals and mortgage approvals stronger than expected in June

Lending to individuals began to bounce back in June alongside a stronger than expected pace of mortgage approvals.

According to the Bank of England, lending to individuals grew at a month-on-month pace of 0.1% or £1.8bn (consensus: -£1.5bn) to reach £1,674.2bn.

That followed a drop of 7.3% in April and of 3.3% in May.

Withing that amount, consumer credit edged lower by £0.1bn to £207.1m as credit card lending slipped by £0.2bn to £61.6bn.

Lending secured on dwellings meanwhile edged up by 0.1% or £1.9bn against May (consensus: £1.5bn) to reach £1,467.1bn.

In parallel, 40,010 mortgages for home purchases with a value of £8.3bn were approved (consensus: 31,000), for a total increase in the value of new secured lending of £15.7bn.

Corporates meanwhile raised £10.7bn in net finance over the month, a volume which remained far beneath the £31.9 observed in March, with the bulk of that - to the tune of £6.3bn - obtained from monetary financial institutions.

Small and medium-sized non-financial enterprises obtained £10.2bn-worth of loans, while lending to large firms shrank by -£16.7bn, which itself was on top of a -£13.0bn drop in May.

Construction and real estate firms registered the biggest increases in lending among SMEs.

Total loans to non-financial companies thus fell by -£6.5bn following a rise of £5.0bn in the month before.

On the opposite of the ledger, the month-on-month rate of growth in so-called broad money, or M4, slowed from 2.3% to 0.7%.

Yet on a 12-month view, M4 was running at 11.9%, up from 11.2% in May and 7.5% for March.

Despite the figures above, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "we continue to expect the recovery in households’ spending to lose momentum in the autumn.

"Meanwhile, low consumer confidence and tighter credit conditions likely will prevent mortgage approvals from sustainably returning to 2019’s average level of 66K."