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Wednesday, 3 July, 2002, 11:02 GMT 12:02 UK
Housing market drives UK lending
For Sale signs
Mortgage lending jumped by 6.8bn in May
The strength of the UK's housing market contributed to a record jump in mortgage lending in May, the Bank of England has revealed.

Lending secured on dwellings jumped by 6.8bn, a 1bn rise on April's figure and the highest since records began in 1993.

But the Bank's data also showed an easing in the level of consumer borrowing, with people using their credit cards less.

The figures were released as the Bank of England's interest rate-setting body - the monetary policy committee (MPC) - began its regular monthly meeting.

Rate dilemma

The house price boom has led many people to call on the Bank to raise rates to cool the market.

But away from the property market, the UK economy is showing few signs of inflationary pressures.

While no rate move is expected imminently, observers think the Bank will raise rates later this year.

"The housing market will continue to send shudders down the MPC's collective spine," said Geoffrey Dicks at RBS Financial Markets.

"They may not act tomorrow but a move to rein in the housing market cannot be far away on these data."

Credit boom eases

Overall total personal lending rose by 8.3bn in May, according to the Bank.

Within this total, consumer credit grew by 1.5bn, a figure which was slightly lower than expected, and down on April's level of 2bn.

Credit card lending also fell, dropping to 292m in May from 744m the previous month.

There were also signs on Wednesday that the UK retail boom could be coming to an end.

A survey from the Confederation of British Industry showed that retail sales in June grew at the slowest rate for 18 months.

Will the UK economy feel the impact of the US slowdown?

Economic indicators

Analysis

UK rate decisions
See also:

03 Jul 02 | Business
01 Jul 02 | Business
20 Jun 02 | Business
01 Mar 02 | Business
20 Feb 02 | Business
30 Jan 02 | Business
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