Mortgage approvals fell from £62,800 in April to 61,700 in May, as the pace the market is contracting slowed further.
The number of approvals fell from 18,053 in December to 14,987 in May.
Chief UK economist Robert Wood: “That was the smallest monthly fall in the current four month sequence.”
He said some caution is warranted over drawing conclusions on the housing market given the Mortgage Market Review and the latest income cap consultation from the Bank of England.
But he added: “House prices are likely to continue rising rapidly. After the temporary disruption from tighter regulations has passed, we expect approvals to return to their upward trend and we look for house prices to gain 10% in 2014 and 2015.”
Berenberg said the BoE is beginning to walk the walk as well as talking the talk on reining in housing risks.
“While the number of mortgage loan approvals has taken a hit in recent months, the value of household borrowing is picking up gradually. Net mortgage lending rose £2bn in May. That is still a weak number in the grand scheme of things, but it is the strongest monthly flow since July 2008. Net finance raised by firms was £4.4bn in May after several weak months, as firms borrowed more from banks,” he said.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “June’s data will show more clearly how much of an impact the Mortgage Market Review rules are having but with remortgaging numbers falling in May, it indicates that existing homeowners could already be struggling to meet the tighter criteria being imposed by lenders.
“Given this backdrop, we find it surprising that the Bank of England feels it needs to act further to curb the lending market and impose new restrictions,” said Harris.
