Banks approved fewer mortgages than economists expected in June as tighter lending conditions and weaker confidence curbed housing demand. The latest indicators end a week of surveys, which point to the housing market recovery losing steam.
Bank of England figures for June showed lenders granted 47,643 loans to buy homes, falling from 49,461 in May. The peak last November reached 59,000.
Net mortgage lending growth eased to £665m in June well below forecasts for a rise to £1bn from May's figure of around £840m.
The bank's governor Mervyn King pointed to continued weak credit flows as a major risk to economic recovery and warned the upturn was not assured, despite stronger-than-expected growth in the second quarter.
King said that improvement in credit conditions seen earlier this year had come to a halt, and that the squeeze on lending was making life very difficult for smaller firms and posed a significant challenge to policymakers.
