UK mortgage and SME lending picked up in February

LONDON (ShareCast) - Money supply growth in the UK slowed in February even as lending continued to edge higher. So-called M4 lending picked up to a 1.9% year-on-year pace last month according to the Bank of England, up by one tenth of a percentage point from the previous month's print.

The rate of growth in the money supply on the other hand fell to a 3.5% year-on-year pace from January's reading of 4.2% - a weak growth rate by pre-recession standards, Capital Economics' Paul Hollingsworth noted.

Total (Swiss: FP.SW - news) lending to individuals grew by £2.5bn to reach £1.47trn for a 0.2% gain month-on-month (2.3% year-on-year).

Mortgage approvals 18% below January 2014 mark The number of mortgages approved for home purchase reached 61,760, after print of 60,707 in the month before. That marked a third consecutive increase to a six-month high.

Commenting on the data, Howard Archer, chief UK and European economist at IHS Global Insight said: "There is mounting evidence that housing market activity is edging up from its recent lows. This underpins our belief that house prices will rise by around 5% in 2015." Consumer credit increased by £0.7bn to hit £169.1bn or by 0.4% month-on-month.

Lending to SMEs picks up The amount of net finance raised by private non-financial corporations (PNFCs) increased £4bn last month, after a decline of £1.3bn the prior month.

Bonds issued by PNFCs rose £2.1bn, bouncing back from January's fall of £3.5bn, with loans from MFIs (£1.6bn) and equity issues (£1.2bn) also supporting the total tally.

Net lending to small and medium-sized enterprises (SMEs) rose by £566m in February, which was the largest increase since the series started in May 2011.