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Mortgage approvals continue to fall in February
The number of homebuyers granted a mortgage fell sharply in February, accelerating a decline which began at the start of the year.

Mortgage approvals dropped 4.7pc to 51,653 in February, following a 2pc fall in January, according to statistics from the Bank of England.

Last month marked the first drop in mortgage approvals after a five month streak of rises, peaking in December, following the launch of the government's Funding for Lending scheme, which aims to boost borrowing by providing banks with cheap finance.

While February's mortgage approval numbers dipped below a six-month average of 52,395, they did mark an improvement compared with the same month last year, when 49,441 home loans were granted.

Howard Archer, chief UK economist at IHS Global Insight, said that the figures masked an underlying trend of modest growth in the housing market.

"Despite the dip in mortgage approvals at the start of 2013, the majority of recent data and survey evidence suggest that housing market activity has firmed modestly overall in recent months, but remains far from racing ahead," he said.

"Indeed the Bank of England mortgage data for February reinforces belief that the upside for house prices currently remains limited."

Meanwhile, lending to British consumers edged up to £158.1bn in February from £157.9bn in January, as spending remains stubbornly subdued.

"We don't expect to see any underlying pick-up [in consumer credit]," said Ross Walker, analyst at RBS.

"Households quite understandably want to reduce debt levels, not acquire more debt. And house prices in the UK have fallen by less here than in other economies that had similar housing bubbles. So housing is expensive and unless you build more homes you're not going to bring prices down and you're not going to encourage people to borrow."

The bleak data, along with disappointing manufacturing activity figures released today, will cast a cloud over the Bank of England's Monetary Policy Committee as they gather later this week to set April's interest rate, but is not expected to spur any action.

Philip Shaw, Investec analyst, said: "We don't think that that is going to be sufficient to push the MPC into the sanctioning QE as soon as this week, but nonetheless, the committee can't be altogether happy with some of these indicators which have shown the economy remaining in uncertain mode."

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