UK mortgage approvals fell in May, while the construction sector declined at its fastest pace in two-and-a-half years during the month of June, signifying a slowdown in the housing sector.
According to the Bank of England, lenders granted 51,098 mortgages in May from 51,627 in the previous month. At the same time, building output dropped to 48.2 in June from 54.4 in May, said a separate report by Markit and the Chartered Institute of Purchasing and Supply.
These figures could spur policy makers at the central bank to increase stimulus. In addition, factory output declined for a second month in June, an indication that the economy is still mired in recession.
Housing demand also fell due to tighter lending and an uncertain economic outlook brought about by the Eurozone debt crisis. The Nationwide Building Society noted that home prices slipped 0.6 percent between May and June.
“Household lending has been depressed for quite a long time and there’s no evidence of improvement on the corporate side,” said David Tinsley, an economist at BNP Paribas SA and former official at the central bank.
He added that economic growth in Q2 could be negative and it would be unusual if the central bank did nothing this week.
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