U.K. mortgage market gains pace

The U.K. mortgage market has strengthened in May, as major mortgage providers approved more than expected loans for house purchases last month, data by the British Bankers Association showed Tuesday. The number of mortgage approvals continued the upward trend and reached 36,102 in May, up from 32,952 approvals granted a month earlier. Analysts, however, expected a 33,100 reading. There is an ascending curve of mortgage approvals since the beginning of this year, as several credit-easing schemes, introduced by the government, have slowly begun to be beneficial and translate into the real economy. 

Since July 2012 the Bank of England was trying to boost credit growth to support the nation's recovery via its Funding for Lending Scheme, which was designed to incentivise private banks and building societies to boost their lending to the U.K. real economy. The BoE has succeeded in decreasing bank's finance costs and reducing the cost of mortgages, however, its impact on business lending has been less visible to date. In addition to that, small and medium-sized enterprises are using their own high levels of cash resources, while large companies are using alternative finance as well, meaning the demand for bank borrowing is limited and reflects challenging trading conditions.