British mortgage lending picked up strongly in June, adding to signs that the housing market is regaining momentum, but a sharp drop in lending to businesses was a reminder that the economic recovery has yet to find a sounder footing.
The value of mortgage lending rose by the largest amount in almost seven years, while there was a renewed rise in mortgage approvals, Bank of England figures on Wednesday showed.
Consumer credit continued to grow strongly, according to the central bank where some policymakers may start to vote for an interest rate hike next week.
But the data also showed a 5.487 billion pound ($8.6 billion) monthly drop in bank lending to non-financial businesses — the biggest decline since records started in May 2011, and compared with a 818 million pound increase in May.
While the lending data is often volatile, the fall could be a concern for policymakers who say business lending is key to the continued resurgence of Britain’s economy.
Finance minister George Osborne said this month that he was giving a new remit to the Bank of England’s Financial Policy Committee that stressed the importance of banks lending for productive investment.
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