The number of mortgages approved by British lenders declined in May on higher mortgage rates, data published by the Bank of England showed on Monday.

Mortgage approvals, an indicator of future borrowing, decreased to 60,000 in May from 60,800 in April. Approvals were forecast to fall to 59,900.

The effective interest, which is the actual interest paid on newly drawn mortgages rose 5 basis points to 4.79 percent in May.

Data showed that secured lending fell to GBP 1.2 billion from GBP 2.2 billion in the previous month. However, the annual growth in secured lending rose to 0.3 percent in May from 0.2 percent in April. This was the first such increase in the growth rate since October 2022.

At the same time, gross lending grew for the fourth straight month in May, to GBP 22.2 billion from GBP 21.1 billion a month ago.

Consumer credit bounced back to GBP 1.5 billion from GBP 0.8 billion in the previous month as both net borrowing through credit cards and through other forms of consumer credit increased in May.

Further, UK businesses repaid a net GBP 0.5 billion of bank and building society loans compared to GBP 1.1 billion of net repayments in April.

Data provided a bit further evidence that the drag from higher activity is starting to fade, Capital Economics’ economist Ashley Webb said.

With the view that the Bank of England will cut interest rates at the next policy meeting in August, this lends some support to the assessment that the economic recovery may be a bit stronger than the consensus, said Webb.

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