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Mortgage approvals drop in February

30 March 2006
New figures from the Bank of England (BoE) have cast something of a shadow over the general optimism surrounding the recovery of the housing market.

Although the Bank's figures showed the number of new mortgage approvals rose by 34 per cent year-on-year, the total number fell to 115,000 from the 121,000 recorded in January.

Mortgage approvals, which are loans that have been arranged but not yet made, are often taken to be a relatively reliable benchmark for future housing market activity in the short term.

Seasonally adjusted, the Bank said that February's drop is the first since the end of 2004, while the growth in the net value of mortgage lending also decreased, down $0.8 billion from £8.9 billion in January and the lowest monthly total since October last year.

On the other hand, consumer credit increased by £1.4 billion in February, compared with a £1.2 billion rise in January.

Encompassing debt on credit cards, unsecured personal loans and bank overdrafts, the figure is the highest since June last year.

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