British loan approvals for home purchase climbed to a seven month high in March, suggesting a cooling housing market is set to stabilise in coming months. The Bank of England said approvals for house purchase - loans agreed but not yet made - rose to 91,000 last month from an upwardly-revised 86,000 in February and the highest since August. Economists said the rise in approvals, which are often seen as an indication of house prices six months out, suggested the once booming market was steadying - albeit at a low level given that they are still down 26 percent on a year ago.
"The figures add to the impression that the housing market may be entering a period of greater stability after the sharp downturn in the second half of last year," said Ed Stansfield, economist at Capital Economics.
A series of recent data has suggested a bottoming out is more likely than a crash. The Nationwide Building Society this week said house prices rose in April but that the annual gain was the weakest in four years.
The BoE said growth in consumer credit picked up a bit more than expected in March. Although a separate survey on Friday showed consumer confidence deteriorated slightly in April.
Analysts said the latest data did not alter expectations that the BoE will leave interest rates on hold at 4.75 percent at its May 9 meeting, but might still raise them later this year. Financial markets took the figures in their stride.
"The BoE should take heart from the mounting evidence that the housing market has achieved a soft landing," said Gavin Redknap, economist at Standard Chartered Bank.
"A rate hike in May looks unlikely but with growth becoming more balanced and inflation edging up we still see another tweak higher in interest rates this summer."
Policymakers have left interest rates on hold for their last eight meetings, highlighting signs of a slowdown in consumer spending as a key risk to their economic outlook.
The BoE said consumer credit rose 1.85 billion pounds in March, more than the 1.7 billion rise expected by economists and above the 1.64 billion pounds in February.
That contrasted with official figures on retail sales and anecdotal evidence from the British High Street which have been almost uniformly downbeat.
Mortgage lending growth was steady in March at 7.0 billion pounds against a forecast of 7.1 billion pounds and barely down from the month before. Growth in mortgage lending has been roughly stable at around that level for the past four months.
Separately, Consultancy GfK Martin Hamblin's latest survey showed consumer confidence worsened in April, with Britons more downbeat on the outlook for their economic situation and personal finances. The barometer of consumer confidence slipped in April to 0 from +1 in March, in line with market expectations.
Prime Minister Tony Blair's ruling Labour Party has been campaigning on its economic track record ahead of an election next when it is expecting to win a third successive term.
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